UNCASVILLE, Conn. – The Mohegan Tribal Gaming Authority, citing the national economic downturn, announced plans to suspend work on its Earth Expansion and re-evaluate the project in about a year.
The full Project Horizon – including the Casino of the Wind expansion that opened for business last month (READ MORE), just 14 months after its ceremonial groundbreaking – has a proposed cost of about $740 million.
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For now, however, planned spending has been scaled back to $271 million, the authority said.
“Given increasing uncertainty in the regional and national economy, we have decided that the most prudent course of action for the authority at this time is to suspend work on the Earth Expansion, which will strengthen our balance sheet,” MTGA President and CEO Mitchell Etess said in a statement late yesterday.
“We continue to believe in the long-term prospects of our business and the Northeast gaming market,” he added – despite the current economic slowdown and the region’s increased competition for gambling dollars, which last month spurred Moody’s Investors Service to place the authority’s bond ratings under review (READ MORE) – “and expect to resume development at Mohegan Sun when market conditions improve over a sustained period.”
As of June 30, total costs for Project Horizon excluding capitalized interest had reached $156.9 million, based on MGTA reports. The authority still plans to spend another $114.1 million on the expansion, including $43 million in fiscal 2009.
Meanwhile, the MTGA has begun discussions with its lenders, including administrative agent Bank of America N.A., about suspending the remainder of the project.
“While we anticipate incurring some modest lease and contract termination expenses,” Etess said, “the vast majority of the approximately $80 million to be invested in the Earth Expansion and the parking garage components of Project Horizon is for valuable improvements to our existing site and facilities that will benefit our business in the future.”
Projects included in the scaled-down expansion plan are:
• Sunrise Square: $17 million
• Casino of the Wind: $116 million
• Property infrastructure: $58 million
• Earth expansion: $75 million
• Parking garage: $5 million
Among the $469 million in projects put on hold for now are the 39-story Earth Tower, with about 900 hotel rooms; the 19,000-square-foot House of Blues Music Hall and its 300-seat restaurant; a 20,000-square-foot spa; additional retail outlets; and the Spirit of the Sea and Spirit of the Earth Corridors, the authority said.
The Earth Tower and Hall of Blues were among the projects announced in May, at an event attended tribal and MTGA officials, House of Blues co-founder Dan Aykroyd and Rockwell Group architect David Mexico, among others. (READ MORE)
The Mohegan Sun, a resort casino on a 240-acre parcel along the Thames River in southeastern Connecticut, is owned by the Mohegan Tribal Gaming Authority. For additional information, visit www.mohegansun.com.
