Station Casinos, like a number of other gaming industry leaders, is experiencing difficulties in the current economic climate. Huge debt loads and tight credit markets have reduced the gambling giant to the brink of filing bankruptcy.

The company has been having trouble for almost a year but it wasn’t until they missed their first bond payment of $14.6 million back on Feb. 2 that management asked bondholders to approve a restructuring plan. After missing another $15.5 million bond payment in March, Station Casinos has few choices remaining.

Negotiations are still being pursued to voluntarily restructure the company but have yet to be approved by bondholders. The proposal includes a debt exchange offer that would give bondholders .10 to .50 cents on the dollar in both new notes and cash. This would enable the company to clear their Chapter 11 filing by summer. The alternative for Station could be to declare complete bankruptcy barring any other solution.

Boyd Gaming, a long time competitor in the same market, has twice this month extended an offer to buy a large portion of assets from Station. The properties they would acquire include the new Aliente StationGreen Valley Ranch ResortWild Wild WestSanta Fe StationTexas Station, the two Fiesta facilities and several smaller gaming businesses. Station would still remain in possession of Sunset StationBoulder Station, Red Rock Resort and Palace Station along with a large parcel of undeveloped property in the Las Vegas Valley.

Despite some financial issues of its own, Boyd Gaming has shown that it has $2 billion available within its line of credit to finance the purchase.

Industry analysts agree on how advantageous this takeover would be to Boyd Gaming and admit that the offer may offer some of Station’s unsecured lenders a better deal.

“I think Boyd is trying to take advantage of a potential opportunity and capitalize on the bankruptcy proposal,” Deutsche Bank gaming analyst Bill Lerner upon hearing of the offer. “Boyd is seemingly offering the subordinated unsecured lenders a better deal than they would get out of the company’s proposal.”

Dennis Farrell, Jr of Wachovia said that Station’s bondholders would see a better return from Boyd Gaming’s proposal than the restructuring proposal.

Joel Simkins of Macquarie Securities said the takeover bid would give Boyd Gaming control over more than a third of the Las Vegas local gaming market.

So far, Boyd Gaming has extended the offer twice and Station Casinos has rebuffed it both times. Will they be able to continue to turn down the offer in the face of bondholders desire to get the most of their return as possible? Only time will tell but it may not be enough time to get Station Casinos through this crisis.