The business arm of the Dry Creek Rancheria Band of Pomo Indians notified investors Wednesday that it will default on millions of dollars in bonds used to build River Rock Casino near Geyserville.
The River Rock Entertainment Authority announced it will not be making the May interest payment due Saturday on two outstanding notes, automatically triggering a default on the bonds.
The tribe emphasized the Alexander Valley casino will remain open for business. But it remains to be seen how the default may impact investors and tribal members who receive payments from the casino's profits.
"Although the scheduled interest payment will not be made, we want to assure our customers, vendors and employees that we are generating sufficient funds to operate our business and provide the excellent customer service that our patrons expect," David Fendrick, the casino's CEO and general manager, said in a statement.
The default comes just six months after the opening of a rival casino in Rohnert Park, which has cut into River Rock's revenues and drawn away gamblers that once flocked to the Alexander Valley casino.
"Our immediate focus is identifying cost savings opportunities to adjust to the challenges of our new competitive environment," Fendrick said.
The tribe also has brought in consultants to help analyze the casino's marketing efforts, Dry Creek Tribal Chairman Harvey Hopkins said Wednesday. Tribal leaders are "looking at all options," he said in a brief interview.
"We've been constantly meeting with management of the casino, attorneys and financial advisors," Hopkins said. "It's been a long road to get here."
The River Rock Entertainment Authority, an unincorporated governmental arm of the tribe, on May 1 announced that it had failed to make the scheduled interest payment for the month. The authority said it would use a 30-day grace period to reduce costs and to have what Fendrick then characterized as "significant dialogue with our bondholders."
River Rock opened in 2002 as Sonoma County's first tribal casino. To finance construction, the tribe sold $200 million in senior notes to investors at 9.75 percent interest.