Banks showing flexibility on Mohegan debt

Banks showing flexibility on Mohegan debt, analyst says
Tribal leaders talking to governor about gambling issues


Uncasville, Conn. — Bankers did not place any restrictions on a recently granted debt waiver to Mohegan Sun’s parent entity, a sign they don’t want to go to bankruptcy court because of Indian tribal sovereignty issues, an analyst said.

“It shows they’re open to anything,” said Roger Gros, publisher of Global Gaming Business magazine. “These issues are very complicated, and every one is different.”

Financing issues between debt-laden Indian casinos and private banks are popping up all over the United States because gambling revenue hasn’t returned to pre-recession levels, Gros said.
Foxwoods Resort Casino’s parent entity, the Mashantucket Pequot Tribal Nation, also is trying to restructure a large debt.

“It’s a problem all over Indian Country,” Gros said.

After Mohegan Tribal Gaming Authority Chief Financial Officer Mario Kontomerkos disclosed during a conference call Wednesday that no conditions were put on the waiver, authority CEO Mitchell Etess expressed optimism about a resolution.

Blackstone Advisory Partners L.P. and Credit Suisse Securities (USA) LLC, which have been working for more than a year to get agreement on a refinancing package on debt totaling $1.6 billion, “remain focused” on the task, Etess said.

“Hopefully, we’ll all come together soon,” he said.

Casino executives warned last week in a filing with the U.S. Securities and Exchange Commission that Mohegan Sun’s ability to operate could be seriously impaired without a resolution. Failure of one or both of Eastern Connecticut’s casinos would be a major blow to the local economy and job market.

Gambling talks

Mohegan Tribal Nation Chairman Bruce “Two Dogs” Bozsum said “good progress” has been made in the debt discussions. Tribal leaders have been speaking with Gov. Dannel P. Malloy about gambling issues statewide, including keno, a bingo-style video game played at Mohegan Sun and Foxwoods Resort Casino. Connecticut Lottery officials have expressed desire to license the game for use in bars and restaurants.

In discussing online gambling, including Intranet games that would be limited to Connecticut, Bozsum said, “I think we have a chance at that. We’ll see where it goes from there.”

Malloy wants Connecticut to keep pace in the gambling industry, Press Secretary Juliet Manalan said. He will weigh social factors in any expansion, she said.

“The governor has been clear that when it comes to the economy, we need to be mindful of what our competition — nationally and internationally — is doing,” Manalan wrote in an email. “This includes the gaming industry, which is a large employer and a producer of significant revenue with which we do good, important things.”

Customers returning

Mohegan Sun and its tribal owner are looking for new revenue sources as they cut expenses at existing properties. Customers are coming to the Uncasville casino in greater numbers after a year of gambling floor “adjustments,” President/CEO Jeff Hartmann said.

“(There are) bright upticks in visitation,” he said. “There was some push-back (from customers), but now they’re coming back.”

One of the new sources is a planned casino in Palmer, Mass. Etess said he remains optimistic about it, although he doesn’t expect a license to be signed this year.

“We feel we have the best location,” he said in answering a question about increasing competition. “We never felt it would be a one-horse race. We never thought anyone would just hand us the license.”

Slot machine revenue for the fiscal first quarter ended Dec. 31 is expected to be roughly the same as a year earlier, Etess said.