Another Tribal Default

New deal on debt for Buffalo Thunder
Under restructuring plan, new bonds will be issued in 2014

Pojoaque Pueblo is restructuring debt obligations incurred four years ago to build the Buffalo Thunder Resort and Casino. This is believed to be the first restructuring of its type involving an Indian casino.

Friday's announcement followed news that the Buffalo Thunder Development Authority, a subdivision of the pueblo, has failed to pay semiannual dividends to its bondholders for at least the third time due to the lagging economy.

Gov. George Rivera, whose sculptures are displayed in the 700,000-square-foot complex with 395 hotel rooms, casino, golf course, restaurants, shops and meeting rooms, made the announcement at a news conference in the Hilton hotel'slobby.

Earlier Friday, the development authority and the tribal council tentatively agreed to the restructuring plan with a group representing 90 percent of the bondholders. The committee consisted of holders of $245 million of 9.375 percent notes issued in 2006.

Approval by the other 10 percent of bondholders, third parties and the National Indian Gaming Commission also is needed, but Rivera said he did not expect a problem with that.

Allen Mosley, chief executive officer of Buffalo Thunder Inc., said that the Buffalo Thunder Development Authority will reset its debt in January 2014 by issuing new bonds based on how much money the resort is making at that time. The bondholders will exchange their old securities for new ones, which will be significantly less in value — and this will mean less debt for the resort.

"It's a very good deal for everybody," Mosley said. "It allows an amount to be set that can be paid back."

"The easiest way to look at it is basically instead of having an operation that we have based on projections, it's going to be paying back based on actuals," Rivera said.

Although restructuring is happening all the time in the gaming world (and in other industries), Rivera said, "We believe that this is the first material restructuring of its type in Indian country. Tough economic times require tough decisions. We will be proud to march hand-in-hand with our bondholders toward a new future."

Rivera, who said the agreement means the authority will not pay the bondholders dividends at the end of this year, blamed Buffalo Thunder's problems on the national economy.

"The timing of all that is due to the recession," he said. "When we opened in 2008, the bottom fell out of the economy. That's when we realized that we needed to do some restructuring of debt. It's taken some time, but we're glad to be at this point today. Both the Buffalo Thunder authority and the bondholders will now have some certainty as to the debt and to the future of this operation."

While Mosley said he couldn't speculate as to why the bondholders did not sue Buffalo Thunder for failure to pay dividends, he noted that they could not repossess the casino or run it and apparently determined that the best recourse was to "make a deal that works for everybody."

Pojoaque, through Buffalo Thunder, the Cities of Gold casino and other businesses, employs 1,200 people with a payroll of about $28 million a year — making it one of Northern New Mexico's largest employers.

The state Gaming Control Board, which monitors Indian casinos in New Mexico, reported earlier this month that the third-quarter "net win" at Pojoaque's two casinos — Buffalo Thunder as well as Cities of Gold — was down 6 percent from last year.

Ohkay Owingeh, formerly San Juan Pueblo, saw its net win drop 3 percent, but Tesuque and Santa Clara pueblos saw modest increases in their net wins, according to the board.