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Eurazeo writes off Station Casino investment

The French private equity firm has written down to zero its €144m investment in the Las Vegas casino operator. It has also written down other investments with Colony Capital, including in the firm’s Colyzeo II fund.

Eurazeo has completely written off its €144.6 million investment in the Colony Capital-backed Station Casinos, the French private equity firm said today.

Reporting overall losses for 2008 of €61 million, the Paris-based firm said it was taking a “100 percent depreciation” on its investment following a “crisis” in the Las Vegas casino sector.

Station recently said it was considering Chapter 11 bankruptcy protection as it struggled with its debt load and declining revenues. The casino operator was bought in a $5.4 billion deal by Colony, Eurazeo and the company’s founding family, the Fertitta family, in 2007. Eurazeo owns a 5.3 percent stake in the company, while Los Angeles-based Colony controls 75.9 percent.

According to Eurazeo’s website, the firm invested in Station as part of a $1.27 billion co-investment vehicle. Colony invested another $1.28 billion from its Colony Investors VII and VIII funds, on top of a $300 million mezzanine investment. The company’s founding family, the Fertitta family, invested $902 million in the Station group.

Unveiling its 2008 results today, Eurazeo also said it was making a €53.3 million “provision” for Colyzeo II, the $1 billion value-added and core-plus real estate fund it set up with Colony and which closed in 2008. The firm said the provision was about 50 percent of its stake and was being made “due to the evolution of the price of the shares held by the fund”.

Eurazeo committed €150 million to Colyzeo II, according to the firm’s website, with the fund investing in four deals to date, including in the French supermarket chain, Carrefour. The predecessor fund, Colyzeo I, closed on €229 million in 2004 and invested in the hotel chain Accor in 2005.

Eurazeo’s chairman Patrick Sayer today said Accor remained “robust”, “true to its business model” and free of structural debt, despite concerns over its falling share prices and the recent departure of senior management.

Last month, Accor’s chairman Serge Weinberg and five other directors left the company after reportedly clashing with Colony and Eurazeo. During Eurazeo’s presentation though, Accor’s chief financial officer Jacques Stern said: “We didn’t invest in Accor, and neither did Colony, to mishandle the group. That’s not our objective, let’s get rid of that fallacy. We are not investing to break up and dismantle the group.”

He added the two private equity firms had five-year investment plans for the hotel chain, adding: “We hope at the end of the five-year period, we hope the markets to be very much better than they are now.”