Nuveen Asset Management and OppenheimerFunds Inc., are among the big losers in the bond devaluation of River Rock Casino’sbonds by itsowners, the Dry Creek Rancheria Band of Pomo Indians.
Nuveen et al acquired $50 million in bonds in 2011 after the casino restructured its debt, the Graton Resort and Casino opened nearby. Now the tribe has devalued its debt to pay 30 cents on the dollar.
It will refinance its debt pay-off by borrowing $50 million from Benefit Street Partners. Indian tribes, being sovereign, can’t declare bankruptcy.
Some financial observers think it remarkable that the tribe was able to borrow that much cash to partially pay its creditors considering its financial situation.
About half of the tribes that have resorted to this sort of restructuring have gone on to fully recover. But admittedly the seven-tribe sample is very small.
The tribe is based on a 75-acre reservation in Sonoma County. It opened its casino in 2002 in the Alexander Valley. It has 1,100 slots and 114 gaming tables.
In 2003 the River Rock Entertainment Authority issued $200 million in 9.75 percent corporate notes. It was forced to restructure them before they matured, offering note holders the option to exchange the old notes for new notes due in 2018.
