LEDYARD, Connecticut (CelebrityAccess) — The Mashantucket Pequot Tribe, owner of Foxwoods Resort Casino, announced on Thursday that they are negotiating with senior lenders after failing "to comply with certain financial covenants" of its credit facilities.
The announcement followed their quarterly earnings report which revealed that the resort casino's earnings before interest, taxes, depreciation and amortization were down by 23.3 million, or 41.4% over the same period in 2013.
This is the second time in 5 years that the tribe has defaulted on their debt. In 2009, they defaulted on $2.3 billion but managed to strike new debt restructuring deals with their creditors, closing on the agreement last year.
"The covenants were established last July as part of MPGE’s capital restructuring. At the time, MPGE and its lenders agreed upon a financial performance forecast that was premised on improved economic conditions and a leveling out of competitive factors. Those developments have been slow to materialize. 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," a spokesperson for the tribe said in the statement.
Despite the default, Foxwoods appears upbeat on their business.
"Foxwoods’ underlying business remains strong and day-to-day operations continue as usual and without interruption. Moreover, the failure to comply with the financial covenants does not adversely impact Foxwoods’ projected liquidity.
"Meanwhile, the Tribe has continued to invest in Foxwoods’ business having recently renovated its guest rooms, refurbished the property’s retail and dining facilities, moved ahead with plans to open Tanger Outlet Mall at Foxwoods in May 2015, and recruited new team members to focus on growing the property’s revenue base. Along with an ongoing focus on operating excellence, these steps will position MPGE for success in its leisure time resort and gaming markets," the tribe spokesperson added.
In recent months, the casino has taken a number of drastic, cost-savings steps, including shuttering a portion of their gaming floor during weekdays and cut their workforce by almost 10%.
“We believe, over the long term, that our focus on elimination of unprofitable lines of business and reinvestment in quality patrons will lead to a sustainable level of profitability,” the casino says in its report." – Staff Writers
