LEDYARD, CT (CelebrityAccess MediaWire) — An unnamed advisor to the Mashantucket Pequot Tribe, owners of Foxwoods Resort Casino has suggested that without finding a way to restructure more than 2.3 billion in debt, the tribe may default this week on a $700 million line of credit. The advisor went on to note say that the marketing of their new MGM Grand Theatre to upscale clientele has been a 'mistake.'
Last week, Foxwoods announced that it was seeking to re-structure its debt load and last Wednesday Standard & Poors downgraded the tribe's credit rating to CCC from B+ and put it on a "credit watch" with negative implications. Since then, Foxwoods has retained crisis management specialists Joele Frank in addition to Miller Buckfire, an independent investment bank, and the law firm Weil, Gotshal & Manges to assist them with their restructuring efforts.
The Mashantuckets teamed up with MGM to launch the newest expansion, The MGM Grand, in May, 2008. The new expansion featured a brand new 4,000-seat theatre, an 825 room hotel and a 21,500 square foot spa along with additional gaming space including 1,400 slot machines for with a total cost of more than $1 billion. While the expansion has helped Foxwoods to remain competitive in the northeast casino market, its also left them deeply burdened with debt and added overhead.
"If we didn't do the deal with MGM we'd be in worse shape." the unnamed advisor told the Day.
While the MGM moniker adds a certain cachet to the property, that cachet comes with a price of several million dollars a year, The Day reported.
"We don't get a benefit from it(The branding deal)," the senior adviser told The Day. "A year from now, it wouldn't surprise me if there was a different name on it (the MGM Grand tower)."
A spokesman for MGM Mirage, which has also been hampered by the financial downturn, downplayed the apparent rift and expressed optimism about the Foxwoods property.
"We were very happy with the execution of the product and, barring the economic downturn, believe MGM Grand at Foxwoods had the potential not only to meet, but exceed our expectations." Gordon Absher, MGM Mirage's vice president of public affairs, told The Day.
Foxwood's deal with MGM Mirage had also included Unity Gaming, joint venture to develop gaming projects in other markets, however weak credit markets have sidelined this endeavor. – CelebrityAccess Staff Writers