MASHANTUCKET, Connecticut — The tribe that runs the country's largest resort casino is showing new signs of strain under the weight of its billion-dollar debt, saying it has had to review its options with senior lenders as a slump continues to batter the Foxwoods Resort Casino.
The Mashantucket Pequot Tribal Nation, which owns and operates Foxwoods, has been selling off land near its reservation in southeastern Connecticut. And in a report this past week, credit rating agency Standard & Poor's lowered its rating for the tribe and said the chances of a debt default appear to be growing.
Foxwoods had unrivaled success for years after opening in 1992 but has struggled to reverse a downturn in recent years as competition has grown from gaming in neighboring states. The tribe, which defaulted on a debt of $2.3 billion in 2009, last year completed a restructuring process that reduced its debt to $1.7 billion.
A week ago, the tribe announced it had entered discussions with senior lenders as a result of "failure to comply with certain financial covenants." It said agreements with lenders were premised on improvements in financial performance that have not materialized.
"In particular, the gaming industry remains weighed down by a sluggish consumer economy while the regional market is feeling the added effect of new competition and increased supply from surrounding states," the tribe said in a news release.
The Day of New London reported that the tribe sold off 371 acres of mostly vacant land in North Stonington last month for $1.25 million. The newspaper, citing town land records and property listings for the report Aug. 9, said the tribe was also looking to shed land holdings in Preston, Waterford, and Hopkinton, Rhode Island.
Representatives for the tribe and the casino did not respond to requests for comment on the tribe's financial situation and whether it is related to the sale of land.
In a report last week on its downgrade of the tribe's credit rating, Standard & Poor's said it believes the tribe might not be able to pay some creditors.
"We believe the combination of continued operating weakness and the failure to comply with financial covenants increases the likelihood of a near-term default," the report said.
The tribe said in its news release that the underlying business remains strong at Foxwoods and the recent struggles that led to talks with lenders do not affect the casino's projected liquidity. The tribe has been renovating the property and plans to open an outlet mall at Foxwoods next spring.