Casino makes partial debt payment

November 18, 2009|Associated Press

NEW HAVEN - Foxwoods Resort Casino, one of the world’s largest, has failed to make a full payment on its debt, leading to a default and another credit-rating downgrade.

The Mashantucket Pequot Tribal Nation, which owns Foxwoods, said it has paid $14.2 million of the $21.25 million semiannual interest payment that was due Monday on $500 million in debt notes. The tribe does not anticipate paying the balance within 30 days, resulting in a default.

The tribe, which has been seeking to restructure billions of dollars in debt, said its efforts are “separate and distinct’’ from operations at Foxwoods and will not affect customers, employees, suppliers, or business partners.

Foxwoods - it has 10,000 employees and 7,000 slot and video poker machines and made more than $700 million in profit last year - is the most high-profile example of a tribe’s defaulting on debt, said Megan Neuburger, director at Fitch Ratings.

She said investors have long wondered what would happen if a tribe, which has national sovereignty, defaults.

“This is definitely a precedent-setting situation,’’ Neuburger said. “Certainly everyone in the investing community will be watching this to see what the outcome is.’’

Standard & Poor’s lowered its credit rating to D, its lowest rating. Lenders will now be more hesitant to make loans to Foxwoods, said Craig Parmelee, S&P’s managing director.

“The availability and cost of financing for Foxwoods in the future is in question,’’ he said.