Creditors who helped finance Mohegan Gaming’s South Korea resort seized control of the property. Bain Capital took over after demanding immediate repayment of hundreds of millions in debt.
Bain Capital has wrested control of Inspire South Korea from developer-operator Mohegan Gaming & Entertainment (MGE).
MGE chief financial officer Ari Glazer signaled an imminent takeover 17 February, in the middle of MGE’s fourth-quarter earnings call. “Just a few hours ago, we received notice … (that Bain had) accelerated the debt,” he said.
Invoking the acceleration provision in its contract allowed Bain to demand that MGE immediately repay $275 million (£218.7 million/€262 million) in loans or surrender control of the integrated resort (IR) in Incheon, Yeongjong Island, South Korea.
In a news release yesterday, MGE acknowledged that it “did not satisfy certain financial covenant tests,” but also has not missed a payment of principal or interest. “Specifically,” MGE wrote, “the loan held by Bain Capital does not mature until May 2027, with no principal payments due before the maturity date.”
MGE also cited “near-term hurdles that are common in new resorts of this scale,” but added that it had positioned the IR for “long-term success.”
A rollercoaster first year
Inspire opened to great fanfare in late February 2024. Inevitably dubbed “the Las Vegas of South Korea,” it offered a foreigners-only casino, 1,275 hotel rooms, a 15,000-seat arena, an indoor water park, meeting facilities and an enviable location, on 4.36 million square metres at Incheon International Airport.
Phase 1 alone cost $1.6 billion, including $666 million in foreign direct investment, reported the Korea JoongAng Daily. MGE’s wholly-owned Korean subsidiary was scheduled to open in phases through 2046, adding an outdoor entertainment park, a 1,000-seat food court and other non-gaming attractions.
At opening ceremonies, Inspire President Chen Si said the IR would make Yeongjong Island “a global tourism destination.”
Inspire seemed like a hit out of the gate. Last year, it helped spur MGE to a record-breaking second quarter, with companywide net revenue of $504 million, up 21.4% over 2023. But the fanfare soon fizzled. Due to high opening costs and low table hold, Inspire accumulated losses of more than $104 million.
MGE continues “good-faith” efforts
MGE hopes to end the standoff. In yesterday’s news release, it noted it has made “several good-faith proposals for amending the financial covenants that are consistent with market precedents.
“We have been and will continue to attempt to negotiate in good faith with Bain Capital to find a mutually agreeable solution,” the company wrote. “We do not believe the change-of-control is in the best interests of the property, its team members and customers, other lenders and various key stakeholders.”
Meanwhile, it’s “business as usual” at Inspire, says Si, with a “bullish” new operator at the helm. The Korea Times reports that the South Korea resort is “pushing for growth, despite (the) ownership change.”
“”
