This installment of The Tribe In The Media is an article in yesterday's Norwich Bulletin regarding the Mashantucket and Mohegan's possibility of defaulting on creditors.
Debts may be too big for Mashantuckets, Mohegans to repay
By William Sokolic
The Norwich Bulletin
February 28, 2009
While unlikely, analysts have not dismissed the “B” word from the realm of possibility at Mohegan Sun or Foxwoods unless lending terms are renegotiated.
In November 2007, Foxwoods took out 8.7 percent high yield notes for $500 million. There is a high likelihood the credit will go into default, making it possible it would face bankruptcy, said Dennis M. Farrell Jr., a gaming analyst with Wachovia Capital Markets LLC in Charlotte, N.C.
“Both casinos are under pressure. They both carry large debt burdens. A potential bankruptcy is a risk,” Farrell said.
Bankruptcy would tread unfamiliar waters because of sovereign nation status.
“This is a very complicated situation. All of those lands in the tribal nations are in trust by the federal government. Creditors could not own the land or assets, nor run the casino. I do not think we’d be in a position to ever file bankruptcy,” said Lynn Malerba, vice chairwoman for the Mohegan Tribe.
The casino owners could stop paying creditors, but that would make it more difficult to borrow money at a later time, said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada at Las Vegas.
Because bankruptcy among Indian tribes has not been tested, an out-of-court settlement seems a more likely solution, Farrell said.
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