When you owe a great deal of money, it's easier to get a new deal. Those people that Chukchansi disenrolled won't be able to get new terms on their debt. A new financing plan for the Chukchansi Gold Resort & Casino will push the payback on loans taken out by the Picayune Rancheria of the Chukchansi Indians to 2020.
More than $300 million in loans that were supposed to mature later this year were restructured in May to allow the tribe a longer-term payback, but at a higher interest rate. It will raise the overall financing costs, but it's unclear by how much.
The Chukchansi incurred a debt of $310 million to build its massive hotel and casino project 40 miles north of Fresno on Highway 41.
The new arrangement involved a series of transactions:
When bondholders with about $303.1 million of the debt agreed to a new payment plan, the tribe paid off nearly $40 million in notes with $30 million in cash. The tribe then exchanged $270 million in old notes for $250.4 million in new financing, according to Standard & Poor's Leveraged Commentary & Data division.
The tribe also had to pay $5 million to $6 million in fees, raising the total bond debt to $256 million, according to the Standard & Poor's report.
"It was unrealistic that the tribe would come up with $310 million by October," said Rob Rosette, the tribe's lawyer. "The tribe got restructured financing on an otherwise nonfinanceable project."
The tribe still owes other bondholders $6.9 million that needs to be repaid later this year, he said.
In addition to the cash payout, the tribe's investors will be paid a 9.75% interest rate instead of the previous 8% rate, said Max Frumes, a reporter for Standard & Poor's Leveraged Commentary & Data division.
Both sides get something out of the deal, he said."The bondholders have cash in their pockets and a new debt agreement with an increased interest rate," Frumes said. "The tribe then pays more interest on less debt."