Tuesday, January 12, 2010

Mashantucket Pequots Respond To Foxwoods Philadelphia Attorney´s Comments

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This installment of The Tribes In The Media is a Norwich Bulletin article in which the president of the Mashantucket Pequots´gaming development arm responds to statements made by an attorney for the Foxwoods Philadelphia investment group about replacing Foxwoods as developer and operator of the future Pennsylvania casino.

Foxwoods: Pa. casino partnership still solid
Newspaper article implies tribe's ouster sought
By William Sokolic
The Norwich Bulletin
January 11, 2010

If the endless delays weren’t enough, a story in Sunday’s Philadelphia Inquirer implied that the partnership putting together the Foxwoods casino in Philadelphia seeks to replace the Mashantucket Pequot tribe as developer and operator.

The story quotes Philadelphia attorney Stephan A. Cozen, who says the Mashantucket Pequots do “not have the wherewithal to carry forward this kind of venture.”

Cozen, an attorney for Foxwoods representing the Philadelphia project, did not return a call for comment.

Foxwoods Development Co. called the article misleading.

“Absolutely untrue,” said Gary D. Armentrout, president of the Foxwoods Development Co. Still he acknowledged that under certain circumstances, Foxwoods would negotiate out of its management role to move the project forward.

Such a move got a big boost last week when Pennsylvania Gov. Edward Rendell signed into a law a bill approving table games at the state’s casinos. The bill included a provision granting the Foxwoods partnership an extension until December 2012 to have a casino in operation.

Since receiving state approval in 2006, the Foxwoods project has been marred by obstacles.

The company ran into neighborhood opposition that led to expensive lawsuits, forcing changes in location from the riverfront site to midtown and back to the river again. On top of that, the recession made it more difficult to find financing, and the gaming board put deadline pressure to have something up by May 2011.

With the location resolved and the extension granted, the thrust now is to find an investor with deep enough pockets to put the development into gear or at least provide enough collateral to acquire final financing.

“No one had the wherewithal to finance new construction in this climate we find ourselves in,” said Joseph Colebut, chairman of the Foxwoods Development Co. board.

$30 million

Foxwoods invested $30 million in the project toward its share of the casino development.

“We’re all pleased that Pennsylvania passed the law to permit table games. That makes it all that more valuable because we can have a full-blown casino operation,” Armentrout said. “At the time we made the equity investment we thought it would be sufficient to go to a third party to finance the project. But in the new world, we require a larger percentage of equity.”

Neither Foxwoods Development nor the local Philadelphia group can put any more capital into the project, he said. If funding comes along, Foxwoods’ share of the development would be reduced.

“The world is a different place,” Colebut said.

Said Armentrout: “When this was conceived, it was anticipated that the Foxwoods Development Co. would be developer and operator. But both of those are now subject to negotiation, depending on who the investor is and how much they put in.”

If the investor antes up a significant amount with the stipulation they would develop and operate the casino, Foxwoods would step aside if the terms were satisfying.

“If it were a bank or equity fund with no gaming expertise we will stay in with a management contract and the investor would own passive equity. But if it’s a gaming company, we would consider giving up the contract,” Colebut said.

The cost to relinquish the contract remains in play as does the name of the casino, Armentrout said.

The partnership is talking with several potential investors. But nothing definitive has come to the table, Colebut said.

“I doubt many gaming companies will jump into this, although the table games bill would encourage them,” said gaming analyst, Roger Gros, publisher of Global Gaming Business. “You’re probably looking at a private investor or banking company,” he said.

Armentrout remains upbeat. “We’re confident going forward,” he said.