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 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.
Iyall said the Cowlitz will have to “stand on their own two feet” to secure financing for the construction.
He pointed to FireKeepers Casino in Battle Creek, Mich., as a recent example of where a tribe secured bonds to build a facility and then turned the management over to another company.
“The Mohegan debt is well-leveraged,” Iyall said. “They are quite capable of addressing their financial needs.”
Iyall said it’s to be expected that the tribe will have to incur some debt to build and run the casino.
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.
Barnett did not return a call Thursday seeking comment.
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, 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.
Stephanie Rice: 360-735-4508 or stephanie.rice@columbian.com.
