The Pueblo of Pojoaque has recently struck a deal to eliminate over million of the 0 million owed on a loan to build the Buffalo Thunder Resort and Casino north of Santa Fe. This deal is the first of its kind for both the nation and the Indian gaming industry, according to Pojoaque Pueblo Governor George Rivera. This agreement is considered an official acknowledgment the pueblo defaulted on its borrowing obligation.
The initial loan was structured in 2006, when the business was in much better shape, and interest rates were at their peak. Rivera states, “By the time the resort opened on August 8, 2008, the recession had already begun and the Resort did not perform as strongly as predicted.” Due to the Pueblo being a sovereign nation, payments on the loan were solely made from resort and casino revenue, and relationships with the tribal leadership. As a sovereign entity, the debt holders were not able to place liens on tribal land or casino operations.
A deal was first discussed in 2009, which sought to bring in stronger management in hopes of agreeing on a repayment deal. An agreement was reached in November 2010, which was based on a three-year analysis of revenue and cash flow at the casino. It wasn’t until October 2014 the exchange of debt was finalized, with the closing completed last week. To ensure investors’ confidence, a neutral private management company was brought in to run the facility for the three years for which the analysis was done.
While no money changed hands under the new agreement, the original bondholders have received $112 million in debt obligations, with an 11 percent interest rate and a 2022 maturity. Additionally, an unsecured secondary debt of $48.9 million is to be paid depending on both the economy and cash flow.
Rivera feels the casino is hardly to blame for the poor performance, as casinos across the nation, including Las Vegas and Atlantic City have dealt with the same issues. The Casino City North American Gaming Almanac lists Buffalo Thunder as housing 61,000 square feet of casino space, which features 1,100 slot machines, 10 table games, and eight poker tables, in addition to 10 restaurants, and 66,000 square feet of convention space, topped off with a golf course.
The tribe reported a net win of $15.8 million in slots for the second quarter of 2014, an amount unchanged from the previous year. “The closing of the deal removes a cloud that hovered over the Pueblo and all of its enterprises,” Rivera said. He then stressed that this new financial arrangement will “provide jobs and economic benefits for New Mexico as well as supporting important governmental programs through the Pueblo.”
