Wednesday, August 26, 2009

Mashantuckets To Seek Debt Restructuring

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This installment of The Tribes In The Media is a Bloomberg News report about the Mashantucket's debt and was reporting shortly after this morning's article on the Mashantucket's dire financial situation appeared in The Day newspaper.

Foxwoods Casino Owner Said to Seek Debt Restructuring (Update1)
By Beth Jinks and Jonathan Keehner
Bloomberg News
August 26, 2009

Mashantucket Western Pequot Tribal Nation, owner of the Foxwoods Resort Casino, is seeking to restructure at least $1.45 billion in debt as winnings dwindle, according to a person with knowledge of the situation.

A restructuring plan has been submitted to creditors and the Connecticut casino’s owners have hired Miller Buckfire & Co., a New York investment bank, as an adviser, said the person, who declined to be identified because the talks aren’t public.

Foxwoods, one of the largest casinos in the U.S. by gambling space, may become the biggest tribal casino company to default. The operation has lost business to the recession and competition from new casinos and racetracks with slot machine- style video-lottery terminals in nearby states. Slot revenue fell 13 percent in July, the casino said on Aug. 14.

“Their options are very, very limited,” Megan Neuburger, an analyst at Fitch Ratings in New York, said today in an interview. “They can’t do the types of things other debtors can in a restructure. Tribal casinos can’t do a debt for equity swap, they can’t raise cash by selling off assets on tribal land.”

Lori Potter, a Foxwoods spokeswoman, didn’t respond to a call and e-mail seeking comment.

Mashantucket has a $700 million revolver loan due in July 2010, $500 million in 8.5 percent bonds that mature in 2015 and $250 million of 5.912 percent bonds due in 2021, according to data compiled by Bloomberg. It may have other debts as well.

New Competition

Closely held Foxwoods, based in Ledyard, Connecticut, once competed only with Atlantic City for gamblers in the northeastern U.S. Today gamblers can also visit the Mohegan Sun casino, operated by the Mohegan Tribal Gaming Authority, 10 miles away in Uncasville, Connecticut, and slot casinos in Pennsylvania; Yonkers, New York; and Rhode Island.

Competition is expected to intensify when New York City’s Aqueduct Racetrack expands and adds slots, and if states including Massachusetts allow casino gambling. The Day newspaper in Connecticut reported the restructuring efforts earlier.

Located on tribal land in the hills of southeastern Connecticut, Foxwoods has three hotels and six casinos with more than 7,200 slots and 380 table games. The Mashantucket Pequots, described as native Algonquins, receive payments from the earnings.

Malaysian investor Kien Huat initially helped finance Foxwoods, which opened a casino and hotel under the MGM Grand brand in May 2008.

Three smaller tribal gaming companies have missed loan obligations during the recession, Neuburger said. In New Mexico, Buffalo Thunder Resort & Casino and Inn of the Mountain Gods Resort & Casino, and in Michigan, Little Traverse Bay Band of Odawa Indians, have defaulted on bond payments.