The Shingle Springs Band of Miwok Indians, owner of Red Hawk Casino, says it has cleared the state-required hurdles in its quest to boost its financial stability.
The tribe this week paid $57.1 million to Lakes Entertainment Inc. of Minneapolis as part of a debt-termination agreement announced in July. Lakes Entertainment, which has been managing the 278,000-square-foot Red Hawk gaming/entertainment complex, confirmed late Thursday that it had received the payment, effectively terminating the agreement under which Lakes was managing Red Hawk.
The lump-sum payment represents a discount of about $9 million on a previous Lakes loan, according to Lakes' regulatory filings. The tribe stopped making principal payments on the loan in 2011.
However, officials openly acknowledged that the tribe's $57.1 million payment is far less than would have been owed by the tribe had the management contract run its full term, through 2015. The amount of that length-of-term obligation, however, has not been disclosed.
The tribe also said it refinanced existing debt, paying off approximately $524 million in debt and payment obligations, and securing a $245 million bank loan and floating $260 million in bonds.
And with that, tribal general counsel AmyAnn Taylor says the tribe has met the state's conditions to receive financial relief.
In May, Gov. Jerry Brown signed into law a new gambling compact designed to ease Red Hawk's fiscal woes. Under its terms, the casino would only have to pay the state 15 percent of its slot-machine profits. That's a significant drop-off from the existing 25 percent highest in the state, according to the tribe and would save the tribe millions.
That compact stipulated that it would not take effect until Red Hawk restructured its other obligations, including the lump-sum payment to Lakes and its multimillion-dollar obligations to bondholders.
On Friday, Taylor said all terms had been met and the governor notified. She said a formal letter of approval and implementation of the reduced slot machine payments could come as soon as next week.
"The tribe is finally in a position to benefit from its own gaming operation," said tribal Chairman Nicholas Fonseca. "That is the way it is supposed to work, and in fact, federal law requires it.
"What it means is that the Red Hawk Casino will be financially stronger, and the tribe will be able to use gaming revenues to support its government in meaningful ways, for the betterment of its people."
"The tribe's contractual relationship with Lakes ended but it remains business as usual," said Yolanda Tayaba, chair of the Shingle Springs Tribal Gaming Authority.
Red Hawk Casino has underperformed since opening in 2008, about a 40-minute drive east of downtown Sacramento on Highway 50. While numerous fiscal factors have been blamed, most analysts point to bad timing, with the casino opening doors amid the recession.
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