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The Deal: Foxwoods Restructures $2.3 Billion Debt After Four Years of Negotiations

He went on to explain that if one tribe filed, only to have its petition denied, the threat of bankruptcy would be unavailable to other tribes in the future. Furthermore, if a tribe filed successfully, the bankruptcy process could call tribes' legal protections into question, potentially stripping them of rights that protect their sovereignty.

Protecting these rights makes a compelling case for finding an out-of-court solution, but also makes it more difficult to reach an agreement.

Businesses owned by Native American tribes have special legal protections that restrict creditors' avenues of recourse. Tribes are legally prohibited from selling tribal assets or issuing equity, and they are legally immune from attempts by outsiders to force a change of control at their businesses.

Without a court to push things along, the discussions at Foxwoods stretched on for four years -- one adviser who worked on the deal compared the process to a "game of Whac-A-Mole" in which, each time one tranche of creditors was satisfied with a provision, another tranche would rise up to dispute it.

Global Leveraged's Reynertson was thrilled that the parties reached a consensual resolution with more than 99% bondholder participation.
[Read: <a target="blank" data-add-tracking="true" href=""><em>Be Greedy on Achillion After Its Selloff</em></a>]

Foxwoods CEO Scott Butera was also happy with the resolution. "This was a one-of-a-kind deal, the first and biggest deal of its type done with Native American sovereignties -- it's a little bit revolutionary," Butera said.

Butera added that the restructuring solved Foxwoods' financial woes, explaining, "We're in very solid financial condition -- if need be, this could be a permanent financial structure."

Now Foxwoods is looking to expand, Butera said. The company is competing for a license to build a $1 billion casino in Milford, Mass., and is evaluating opportunities for a $300 million to $600 million casino in the Catskill Mountain region of New York.

The Milford proposal involves plans for a 660,000-square foot casino that would require a $20 million contribution from Foxwoods, according to Butera, who is working with Deutsche Bank to raise the necessary funds through debt and equity financings. Butera added that the new project would be nonrecourse to Foxwoods, so it won't put a huge burden on the casino's capital structure.
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