This installment of The Tribes In The Media is an article by Brian Hallenbeck in The Day newspaper on the Mashantucket Pequots debt situation. In our view, the Mashantuckets should tell their bankers that they will get paid out of future profits from the proposed Foxwoods Philadelphia casino project. The Tribe's bankers helped get them into the mess yet they seem to not want to help the Tribe succeed with the Philadelphia project.
Mashantuckets, lenders discuss loan extensions
By Brian Hallenbeck
May 1, 2010
Mashantucket - The Mashantucket Pequot Tribe, which owns Foxwoods Resort Casino and MGM Grand at Foxwoods, is negotiating an extension of its forbearance agreement with senior lenders, the tribe said Friday, the day the agreement was set to expire.
"While discussions are ongoing," the tribe said in a statement, "… the tribe will be operating as usual."
The Mashantuckets, who are restructuring more than $2 billion in debt, have been negotiating for months with a banking syndicate that extended a $700 million line of credit, which comes due in July. The tribe first announced that it had reached a forbearance agreement late last October. The agreement stretched through Jan. 20, at which time the tribe announced it would be extended through April 30.
During forbearance, a lender agrees not to take action against a borrower who defaults on the terms of a loan agreement.
Since entering into forbearance with the banks, the tribe has defaulted on interest payments owed to bondholders. In November, the tribe paid about two-thirds of a $21.25 million interest payment due on $500 million worth of 8.5 percent notes. The tribe's failure to pay the full amount prompted Standard & Poor's, the credit-rating agency, to assign the tribe and the bonds "D" ratings, the lowest possible.
Standard & Poor's has also assigned "D" ratings to three series of special revenue bonds on which the tribe failed to make interest payments due March 1. Under the terms of the forbearance agreement, Standard & Poor's said at the time, "the administrative agent (for the senior lenders) has exercised its right to prevent the transfer of free cash flow into trustee accounts that collect funds for the required principal and interest payments for the Tribe's junior creditors."
The tribe's financial woes stem largely from the effects of the recession and increasing competition, forces that have wreaked havoc on the balance sheets of many gaming operators.
Seasonal Closing - Because the Mashantucket Pequot Museum and Research Center is closing seasonally this year, the Research Library, the Children’s Library, and Archives & Sp...
3 years ago