Monday, April 21, 2008

Tribe's Banker Sees Its Profit Fall By 77% On Loan Writedowns

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Bank of America, the admistrative agent for the tribe's $1 billion line of credit and the backer of two tribal credit lines that total $50 million, announced a 77% decrease in first quarter profits due to trading losses and a $3.3 billion increase in reserves for problem loans.

Bank of America's chief executive, Ken Lewis said, "The weakness in the economy and prolonged disruptions in the capital markets took their toll." The bank said it "remains concerned" about the health of the consumer.

The troubling news comes on the heels of Bear Stearns, the investment bank that helped the tribe make history by raising money on Wall Street to build the original Mohegan Sun casino, becoming history itself last month when the credit crisis forced the firm's fire sale to JP Morgan Chase.

Bank of America is the administrative agent for the Mohegan Tribal Gaming Authority's $1 billion line of credit, which is being utilized for expansions at Mohegan Sun and the tribe's slot parlor in Pennsylvania and which may be increased to $1.25 billion at MTGA's request. Bank of America serves as the admistrative agent for the syndicate of 23 financial institutions and banks that are involved in the deal.

In addition to the $1 billion line of credit, MTGA has a $25 million line of credit with the Bank of America, which matured on March 31st, and a $25 million revolving credit that finances the proposed Cowlitz (Salishan-Mohegan) casino in Washington. As of December 31, 2007, MTGA used $18.8 million of the Salishan-Mohegan revolving credit line, which matures in July 2009.