In February, Bain Capital seized control of Inspire South Korea. Now it’s put out the for-sale sign.
Three months ago, global investment firm Bain Capital wrested control of Inspire South Korea from developer-operator Mohegan Gaming & Entertainment. On Saturday, local media announced that the $1.6 billion resort is up for sale.
But the transaction will not be simple, as Bain does not fully own the property and a new operator may have to reapply for the gaming licence.
Loan default ended Mohegan’s brief Korea reign
On 19 February, Bain invoked an acceleration provision requiring Mohegan to immediately repay $275 million in loans or surrender control of the resort. Short of liquid capital, Mohegan ceded control but said it was committed to reclaiming the property. Meantime, Inspire President Chen Si promised it would be “business as usual” with a “bullish” new operator at the helm.
Inspire features 1,275 hotel rooms, a 15,000-seat arena, an indoor water park, meeting facilities and a prime location, on 4.36 million square metres at Incheon International Airport. But it fell short where it really matters: on the gaming floor.
Failing to draw a strong base of international punters, especially Chinese VIPs, Inspire lost $104 million in its first year. Mohegan blamed a combination of high opening costs and low table hold for the deficit.
The US-based tribal operator argued that “near-term hurdles are common in new resorts of this scale”. It added that it had positioned the integrated resort for “long-term success.”
Bain does not yet hold legal title to Inspire
According to the Korea Times, Bain has described the sale as a rare opportunity to acquire a new luxury resort with casino license.
But a source told the publication that Bain does not yet hold legal title to MGE Korea and must first complete “a valuation of the collateral asset”.
A third-party buyer would face hurdles of its own. It may have to reapply for the casino licence. It would also have to demonstrate adherence to conditions assumed by Mohegan: to develop Inspire as a keystone of South Korea’s cultural and tourism development.
“The license was granted to Inspire. So regardless of any changes in share ownership, Inspire is still obligated to meet certain conditions,” a Tourism Ministry official told the Times. “That includes making specific investments and constructing required facilities. We will continue to monitor how those terms are being upheld.”
Of 17 casinos in South Korea, just one — Kangwon Land in remote Gangwon Province — is open to Korean nationals. Success for Inspire “will always be a challenge until they actually open it up to locals”, gaming analyst Brendan Bussmann told GGB Magazine. Despite its enviable airport location, visitation remains “exceptionally challenging. You’re constantly worrying about airflow coming in and out.”
