Foxwoods Tribal Casino Negotiating with Lenders to Reorganize

Foxwoods Casino is testing new legal waters as it attempts to reorganize debt while restricted by the Indian Gaming Authority Act.

The Manshantucket Pequot Nation is attempting to restructure the debt owed by its Foxwoods Casino, in Connecticut. Tribal leaders say the decline in gambling revenue due to the recession has led to the need to reorganize upcoming debt payments, although they insist the casino is current on all bills.

Foxwoods does have a major line of credit maturing next summer for $700 million, a sum which it would much prefer to pay further down the road. But federal restrictions on tribal gaming make restructuring far more difficult than for normal casino companies.

Creditors cannot take equity in tribal casinos, leaving Foxwoods without a potentially attractive option that has been floated by other gambling operators seeking extra capital. But neither can lenders seize the tribal assets, says an article in the New York Times.

Foxwoods has suffered both from the general economic malaise and from increasing competition, a prospect likely to only get worse as Massachusetts eyes gamning laws designed to prevent revenue dollars from escaping to Connecticut.

Still, tribal authorities insist the move does not signal desperation.

“We have sufficient resources to continue to operate our businesses as normal, and it will be business as usual,” read a tribal statement.