Move is part of tribe's efforts to restructure more than $2 billion in debt
The Mashantucket Pequot Tribal Council is eliminating per capita payments to tribal members as part of efforts to restructure more than $2 billion in debt.
The tribal government, owners of Foxwoods Casino Resort in Connecticut, has informed some 450 members that their monthly distributions - said to range between $7,500 and $10,000 as recently as a year ago - will cease December 31.
According to local news reports, it is not clear whether the council is ending the payments by choice or whether it’s been more or less forced to do so by its senior lenders, which includes Kien Huat, the Malaysian group that bankrolled construction of Foxwoods, and a Bank of America-led syndicate that provided a $700 million credit line.
Under a revenue-distribution system referred to as a "waterfall," all net revenue from the operation of Foxwoods - after operating expenses and payments to the state are deducted - flows into bank accounts from which the tribe's creditors are satisfied in accordance with a specified order of priority. After Kien Huat and the banks, the creditors include holders of special revenue obligation bonds, subordinated special revenue obligation bonds and short-term notes. What’s left after those payments goes to the tribe, which uses it to fund tribal government and per capita payments.
There was some good news as well, in the form of a Philadelphia Inquirer report on Sunday that Las Vegas-based casino giant Harrah's Entertainment could join forces with the Pequots and other investors in the long-stalled Foxwoods Casino on Philadelphia’s waterfront.
Pequots suspend per capita payments
July 14, 2010