Foxwoods Casino Owner to Restructure $2.2 Billion in Debt
The Mashantucket Pequot Tribal Nation, owner of the Foxwoods Resort Casino in southeastern Connecticut, reached a preliminary agreement with lenders to restructure $2.2 billion in debt.
The accord lowers the debt balance and extends maturities at favorable rates, Foxwoods Chief Executive Officer Scott Butera said yesterday in a statement, without disclosing specifics. The tribe will work with lenders and bondholders to build support for the agreement over the next several months.
“This represents a critical step forward for our business,” Butera said in the statement. “It provides for a capital structure that will support significant investments in our gaming and hospitality businesses.
The tribe's senior secured credit facility and Kien Huat loans will be restructured into two term loans with five- and seven-year maturities, according to the statement. Bondholders will receive new securities with lengthened maturities of 13, 18 and 23 years based on the seniority of the existing bonds.
Holders of its subordinated special revenue obligations and 8.5 percent notes will receive new debt at a discount to the face value of accrued principal and interest, the tribe said.
Bank of America and Wells Fargo will arrange a $30 million working capital facility for the tribe with a 30-month term.
Hud Englehart, a spokesman for the tribe, declined to discuss additional details of the proposal.
Foxwoods, among the largest casinos in the U.S. by gambling space, is located on tribal land in the town of Ledyard. It opened a casino hotel expansion under the MGM Grand brand in 2008 just as the recession began to pinch gambling revenue and nearby states expanded their gaming offerings.
Foxwoods generated slot-machine winnings of $614 million in the 12 months ending June 30, a 5.5 percent decline from the same period last year, according to statistics from the State of Connecticut. In its peak year, 2005, slot winnings totaled $819 million.
Since it is located on tribal land, lenders cannot foreclose and the property cannot be restructured in a Chapter 11 bankruptcy proceeding, Butera told the New York Times this year. He described the situation as ‘‘sort of like being stuck in no man’s land.’’
There have been nine Native American gambling defaults since the recession, affecting more than $4 billion of capital, according to Michael Paladino, a Fitch Ratings analyst.
‘‘The marketplace will welcome the upcoming visibility from the resolution of the largest and most complex Native American gaming default to date,’’ Paladino said in an e-mail.
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