With debt write-down, Harrah's seems poised to take over Foxwoods

In a sign that it might soon take over the troubled Foxwoods Casino project, Harrah's Entertainment Inc. has written off $52.3 million in debt owed by the local investor group for the 16.5-acre site on the Delaware waterfront in South Philadelphia.

The disclosure was contained in Harrah's financial results for the second quarter, which ended June 30.

According to people familiar with the deal, forgiveness of the debt, incurred in 2005, is part of the negotiations to transfer control of the Foxwoods project to Harrah's.

A spokeswoman for Harrah's, Jacqueline Peterson, said in an e-mail that the write-down was "merely an accounting measure" that was "unrelated to anything else." The amount, she added, was an "accounting determination" of the current value of the note.

The local investors, led by Comcast-Spectacor chairman Ed Snider and charitable interests for the families of lawyer Lewis Katz and developer Ron Rubin, were deeded the land by an affiliate of Harrah's. They did not pay for the land, but gave Harrah's a promissory note, payable in 2015, for $67.3 million.

The affiliate - Caesars Entertainment - wanted to develop a casino on the site, but dropped the idea after being acquired by Harrah's.

The local investor group decided to team up with the Mashantucket Pequot Indian tribe of Connecticut to build a casino on Columbus Boulevard between Tasker and Reed Streets. The former brought land to the table, while the tribe agreed to finance, develop, and operate the casino. But the Mashantucket Pequots faced severe financial problems in 2008, hampering their ability to lead the project.

The local investors tried to move the project to Center City, but were forced back to the South Philadelphia site. They reached out to casino mogul Steve Wynn, but he abruptly dropped out of the project in April, which set off the search for yet another new partner.

Because of the money it was owed for the land, Harrah's became a likely candidate, gaming analysts said.

A lawyer for the Foxwoods group, F. Warren Jacoby, signaled to the Pennsylvania Gaming Control Board at a hearing July 29 that the sides were getting close to an agreement.

He said he expected the investors to sign a "term sheet" by early August. He did not return calls Monday for comment.


Contact staff writer Jennifer Lin at 215-854-5659 or jlin@phillynews.com.