The tribe that owns the Foxwoods Resort Casino in Connecticut said Wednesday that it was seeking to restructure its debt as revenue slumped. But legal hurdles connected to its tribal ownership may complicate those reorganization efforts.
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Suzanne DeChillo/The New York Times
Foxwoods Resort Casino says that it is current on its debt obligations, including a $700 million credit line due next July.
The Mashantucket Pequot Tribal Nation said that it had hired the investment bank Miller Buckfire and the law firm Weil, Gotshal & Manges to negotiate with its bank group.
It says that it is current on its debt obligations, including a $700 million credit line that comes due next July, though Foxwoods has an interest payment due Sept. 1.
“We have sufficient resources to continue to operate our businesses as normal, and it will be business as usual,” a spokesman for the tribe said in a statement.
The gambling industry has been severely hurt by the recession and less spending by consumers. Some casinos, like Stations Casinos and Fontainebleau Las Vegas, have already filed for bankruptcy protection. Others, like Harrah’s Entertainment and MGM Mirage, have managed to gain some breathing room by negotiating with creditors.
Foxwoods, based in Ledyard, Conn., is one of the biggest casino resorts in the country, and once had little competition throughout the Northeast. Now, however, it must contend with competition from the Mohegan Sun casino and slot operations in nearby states. The Mashantucket Pequot tribe uses its revenue to finance its government operations.
Native American gambling resorts, however, bear extra limitations on restructuring that other casinos do not. For example, creditors cannot seize the assets of a resort like Foxwoods or take an equity stake because of restrictions in the Indian Gaming Authority Act, according to a June report written by Moody’s Investors Service analysts. Because no Native American-run casino has filed for bankruptcy, these conditions have not been tested by federal courts before.
Both Moody’s and Standard & Poor’s downgraded Foxwoods’ debt ratings on Wednesday
News of the tribe’s efforts to restructure the casino’s debt were first reported by The Day of New London, Conn.
On Wednesday, Gov. M. Jodi Rell held a news conference to address concerns that a default by the casino would hurt state revenue. Last fall, Foxwoods announced 700 layoffs.
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