Native American tribe United Auburn Indian Community was able to fill out a $92.5 million term loan after receiving a ruling that non-bank entities are allowed to lend to tribes in California. Glenn Christenson, cfo, executive v.p., treasurer and director of Station Casinos, which is the management partner for the federally recognized tribe, said the bank deal was pitched to lenders last fall and raised $142.5 million for the credit from solely bank lenders. Until the ruling was passed, non-bank entities were not allowed to lend to tribes, he said.
The credit originally included a $122.5 million revolver and a $20 million term loan. Now the credit is for $215 million with a $92.5 million "B" loan that includes institutional tickets. The credit supports a $215 million project for United Auburn's construction of Thunder Valley Casino in Sacramento, Calif., he explained.
Christenson said the ruling was the right thing to do in terms of relaxing the lending restrictions for United Auburn and other California tribes. Bank of America and Wells Fargo Bank lead the credit, just as the two lenders are involved at the top tiers on Station Casinos' $365 million credit, Christenson noted (LMW, 9/30). Deutsche Bank, Bank of Scotland, Comerica Bank and Hibernia Bank are also involved in the new deal for United Auburn, he noted. Pricing on the term loan is LIBOR plus 41/2%.
Las Vegas-based Station Casinos is developing Thunder Valley, which in turn delivers Station Casinos a monthly management fee of 24% of pre-tax income. Station Casinos is also required to provide credit support to United Auburn that would effectively cure any violation of financial covenants or payment defaults. This is pursuant to a make-well agreement between the two entities that may be released after Thunder Valley's first full year of operations and if certain performance targets are met. Construction of Thunder Valley began in October 2002 and most of the property opened last month.