The Mohegan Tribe has fanciful dreams of a Slot Barn in Palmer, Massachusetts that seem to be dashed by their financial implosion.
Surely, the capital markets, recently devastated by 'casino capitalism' will be anxious to loan more $$$$, especially after Moody's Lowers Mohegan Tribal Authority To Highly Speculative.
Maybe someone could share this with perennial Slot Barn Cheerleader, Paul Burns.
Financial solvency must be a significant consideration for Beacon Hill.
From SEC Filing
[worth reading in its entirety]
Risks Related to Our Business
Town of Montville Agreement
In June 1994, the Tribe entered into an agreement with the Town of Montville, or the Town, under which the Tribe agreed to pay the Town $500,000 annually to minimize the impact of Tribe’s reservation being held in trust on the Town. The Tribe has assigned its rights and obligations under the agreement to us.
[Included to call your attention to one of the reasons Mohegan Sun is immensely profitable. When you don't pay your fair share of taxes or contribute adequately to your host community, of course, it enhances profitability. That's one of the problems with Indian Casinos across the country.]
We currently have and will continue to have a significant amount of indebtedness. As of September 30, 2010, our debt totaled $1.64 billion. As of September 30, 2010, $527.0 million was drawn on the bank credit facility. Inclusive of letters of credit which reduce borrowing availability, and after taking into account restrictive financial covenants under the bank credit facility, line of credit and note indentures, we had approximately $31.4 million of borrowing capacity under the bank credit facility as of September 30, 2010.
Our substantial indebtedness could have significant adverse effects on our business. Such adverse effects include, but are not limited to, the following:
• make it more difficult for us to satisfy our debt service obligations;
• increase our vulnerability to adverse economic, industry and competitive conditions;
• require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures and other general operating requirements;
• limit our flexibility in planning for, or reacting to, changes in our business and the gaming industry, which may place us at a disadvantage compared to our competitors with stronger liquidity positions, thereby hurting our results of operations and ability to meet our debt service obligations with respect to our outstanding indebtedness;
• restrict us from exploring business opportunities;
• place us at a competitive disadvantage compared to our competitors that have less debt; and
• limit, along with the financial and other restrictive covenants in our outstanding indebtedness, the ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general operating requirements on satisfactory terms or at all.
Cowlitz not worried despite casino backer's growing debt
Mohegan tribe owes $2.1 billion
In its annual filing with the U.S. Securities and Exchange Commission, the Connecticut-based Mohegan Tribal Gaming Authority, thought to be the muscle in the Cowlitz Indian Tribe’s plans to build a casino in Clark County, paints a picture of a company straining to handle its debt.
That load totals $2.1 billion, according to the filing, which was posted online Thursday by the SEC.
The gaming authority reported $1.64 billion in debt and other obligations to total $2.1 billion; $1.2 billion of that debt is due in one to three years.
On Dec. 23, the Bureau of Indian Affairs announced that it had approved the Cowlitz Indian Tribe’s application to take 152 The gaming authority reported $1.64 billion in debt and other obligations to total $2.1 billion; $1.2 billion of that debt is due in one to three years.
On Dec. 23, the Bureau of Indian Affairs announced that it had approved the Cowlitz Indian Tribe’s application to take 152 acres near La Center into trust to establish a reservation and operate a casino.
The tribe filed the application in 2002.
Cowlitz Chairman William Iyall, who said last week that the $510 million casino-hotel complex would be built in phases, said Thursday that the Mohegan’s debt would not be a deal breaker.
The Mohegan Tribal Gaming Authority is the gambling arm of the Mohegan Tribe, and operates the Mohegan Sun in southeastern Connecticut and Mohegan Sun at Pocono Downs in Plains Township, Pa. In addition to partnering in 2004 with developer and Cowlitz Tribe member David Barnett to form Salishan-Mohegan, LLC, the Mohegan group also has been working on plans to manage casinos in Massachusetts and Wisconsin.
The Mohegan’s 160-page SEC filing addresses the BIA’s approval of the Cowlitz trust application.
The Mohegans are the majority partner in the company that would manage the casino for seven years in exchange for 24 percent of net revenues.
It ended its summary of the Cowlitz project on a cautionary note.
“We can provide no assurance that these conditions will be satisfied or that the necessary financing for the development of the proposed casino will be obtained.”
The Mohegans listed declining revenue — net income dropped from $149 million in fiscal year 2008 to $9.7 million in fiscal year 2010 — and increasing competition from other gaming operations as key areas of concern.
As for risks, the Mohegans wrote that “our substantial indebtedness could adversely affect our financial condition.”
The group currently has approximately $31 million of borrowing capacity.
The debt, among other things, “could restrict us from exploring business opportunities.”
The Mohegans, which must report their financial status to the federal government because its debt is traded publicly, [otherwise, this information would be unavailable to you] wrote that in light of the “uncertainty” about the Cowlitz project, it has written off $9.4 million, or approximately one-third of its investment.
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