New deal with Bank of Oklahoma will save Quapaw Nation $ 55,000 per day in interest on downstream casino loan
In 2008, reporters and photographers lined up to take photos of the new Quapaw Nation Downstream Casino in far northeast Oklahoma. According to an article published in Joplin’s globe, the 7,000,000-foot space was a marvel for its opulence, attention to detail, restaurants and 2,000 slot machines. The price to pay: $ 301 million.
But as of December 2021, the Quapaw Nation had only repaid a small portion of that debt, as it was making interest-only payments amounting to $ 55,000 per day. That’s the price of a house in Ottawa County, where the casino is located.
A new agreement between the Downstream Development Authority and the Bank of Oklahoma will allow the Quapaw Nation to refinance this debt to pay off the original loan and reduce its interest rate.
The casino was supposed to be paid off within 20 years, and former President John Berrey touted the deal’s benefits for the Quapaw, including housing assistance and utilities.
But documents emerged showing the Downstream Casino underperformed projections and had limited benefits for the tribal nation, in part due to poor funding conditions.
Quapaw Nation Secretary-Treasurer Guy Barker said he and current business committee chair Joseph Byrd began reviewing the project when they took office in 2020. An audit found Berrey gave illegal bribes and bonuses. They also discovered the high interest rate and the lack of return for the tribal citizens.
“After more than a decade this should have generated income to fund tribal services. Instead, we were barely paying the interest on the loan and our citizens were not seeing the full benefit of their assets,” Barker said. .
He said it was difficult for Native American tribes to secure traditional funding for large-scale projects like casinos. Instead, they often have to resort to junk bond financing, which is risky and has a higher interest rate. However, after the opening of Aval and the executives were able to show that it was making money, they should have taken the opportunity to refinance. This does not happen.
The new terms with Bank of Oklahoma Finance include a much lower interest rate of 3.25%, compared to the more than 10% interest that Quapaw Nation was paying on the loan. The lower rate will allow the tribe to start repaying the principal.
The refinancing was made possible in part because the Quapaw Nation raised its credit rating against Moody’s after record earnings in 2021 at Saracen, their luxury resort and casino in Pine Bluff, Arkansas.
Ben Blosch, a Cherokee citizen with more experience in managing gaming operations in the Indian country, is the CFO of Downstream Casino. He said that without this refinancing, the Quapaw tribe would be stuck in a financial rut.
“As Aval eliminates its debt, tribal citizens will benefit, as they should have been years ago,” Blosch said in a statement.
Barker said having experienced people is invaluable.
“My predecessors, for better or for worse, had a number of flaws, but they have no experience in industry and corporate finance, ”said Barker..