August 3, 2012

Tribe reaches deal to restructure Foxwoods debt

The tribe that owns and operates the Foxwoods Resort Casino on Thursday announced an agreement to restructure $2.2 billion in debt, resolving a financial crisis surrounding the largest casino in the Western Hemisphere, The Associated Press reports.

The Mashantucket Pequot Tribal Nation had imposed new austerity measures on tribal members as it renegotiated the debt. Earlier this year, the tribe in southeastern Connecticut ended shared revenue stipends that once exceeded $100,000 annually for each adult.

The tribe said that over the next several months it and the steering committees of its lenders and bondholders will work toward building support for the agreement and implementing the restructuring. Foxwoods CEO Scott Butera said the plan will put the tribe and the casino back on solid financial footing.

"This represents a critical step forward for our business," Butera said. "The comprehensive agreement substantially lowers our aggregate debt balance and extends maturities at favorable interest rates. It provides for a capital structure that will support significant investments in our gaming and hospitality businesses.

After years of unparalleled success, the casino in recent years has struggled with increased competition and slackening demand. Foxwoods completed a major, costly expansion with the 30-story MGM Grand hotel and casino at the height of the recession in 2008.

Under the terms of the restructuring agreement, the tribe said, bond holders will receive new securities with lengthened maturity dates. Holders of subordinated special revenue obligations will receive new debt at a discount to face value of accrued principal and interest.

Tribal chairman Rodney Butler said the implementation of the agreement will strengthen Foxwoods and help provide for the long-term financial stability of the tribal community.

"It is fair and consensual, and implementation of the plan will help provide for the long-term financial stability of our tribal community as well as enhance the competitive strength of Foxwoods Resort Casino," Butler said.

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