In wake of South Korea loss, Mohegan Gaming finalises refinancing
In a news release last Thursday, the Mohegan Tribal Gaming Authority and a subsidiary, MS Digital Entertainment Holdings, announced they had closed $1.2 billion in refinancing, entered into a “new, upsized” $250 million revolving credit facility, exchanged $226 million of 2027 unsecured notes for 2031 secured notes and agreed to extend a portion of 2027 unsecured notes to 2029.
Separately, the Mohegan tribe acquired $100 million of 2027 unsecured notes and extended the maturity to 2032.
The package came together roughly 60 days after a cash crunch caused Mohegan to lose control of Inspire South Korea. The integrated resort (IR) near Incheon International Airport, which opened in March 2024, was Mohegan’s maiden entry in the competitive Asian gaming market.
The IR opened with three five-star hotel towers; a 15,000-seat concert hall; expansive conference facilities; an indoor water park; and a foreigner-only casino. Immediately dubbed “the Las Vegas of South Korea”, Inspire was almost the tribe’s undoing.
Change of command in South Korea
In fiscal 2024, Mohegan posted record revenues of $1.9 billion alongside a net loss of $235 million. In January, it acknowledged “an imminent debt covenant violation” that risked its survival as a going concern. It attributed the shortfall to ramp-up costs in South Korea, as well as low table hold at Inspire’s casino.
Unable to cover $275 million in pending debt repayments, the Uncasville, Connecticut operator proposed covenant amendments that aligned with market standards.
But primary lender Bain Capital would not be pacified. The Boston-based investment firm invoked an acceleration clause, demanding that Mohegan pay up at once or forfeit control of Inspire. On 19 February, Bain exercised its right to take over the IR on Yeongjong Island.
Bain assured stakeholders the change of command would not disrupt operations for employees or guests. And Inspire president Chen Si promised “business as usual” at the resort, with a “bullish” new operator at the helm.
A clean slate for Mohegan
Now relieved of debt maturities into 2029, Mohegan is free to “reduce leverage, improve borrowing costs and create greater strategic flexibility”, said chief financial officer Ari Glazer.
Tribal chairman James Gessner Jr called the housecleaning “a clear demonstration of our unwavering commitment to the success of Mohegan”.
The operator now has “extended maturity runway and financial flexibility”, Gessner added. The development “strengthens our alignment with investors as we redeploy capital back into the company”.