The principal lender of debt held by MGE Korea Ltd, the parent company of South Korean integrated resort Mohegan INSPIRE, has moved to take control of the company’s shares.
Ari Glazer, Mohegan’s Chief Financial Officer, provided the update during the group’s earnings call for the December 2024 quarter, with the shock move by the lender, Bain Capital, coming after Mohegan had published its quarterly financial results just hours earlier.
Mohegan had last month revealed that it was in default under the terms of a US$275 million “Korea Term Loan” for the US$1.6 billion Korean IR but said at the time it was in discussions with lenders and was confident of a solution given its sufficient cash and liquidity position.
Instead, Glazer said the company was now considering its options after seemingly being caught out by the news.
“Following the earnings release this morning and just a few hours ago, we received notice from the agent for the lenders to MGE Korea Ltd, the parent company of INSPIRE, that they have accelerated the HoldCo debt,” he explained.
“Further, the agent and Bain capital, the principal lender, have purported to take certain remedies including appropriation of the shares of MGE Korea Ltd.
“We are evaluating the propriety of these actions and considering the appropriate responses.”
Glazer clarified that acceleration of the Korean HoldCo debt would not result in a cross default in any other debt of Mohegan but added, “While we did not expect any material impact on our operations at any of our North American properties in the first quarter, we do need to evaluate the impact of these events on our overall financial reporting. We will provide subsequent disclosure in due course.”
The company declined to make any further comment throughout the earnings call.
Mohegan last month described the default as a debt covenant violation related to provisions contained within loan documents requiring INSPIRE to achieve agreed financial targets, and was not related to a missed payment, principal or interest.
“As is customary, we have negotiated in good faith to amend the covenants and give the business more time to ramp up and achieve its potential,” Glazer said during a January investor call. “I can share that Mohegan has made multiple proposals to the HoldCo lenders with respect to an amendment, however the conditions required by the lenders have not been acceptable. We continue to negotiate in good faith with the HoldCo lenders to identify a solution although we cannot guarantee that we will be successful in doing so.”
Mohegan INSPIRE held a soft opening of its non-gaming operations in November 2023 and launched its foreigner-only casino a year ago in February 2024. While slow to ramp, the property has shown steady month-to-month improvement including an all-time high in mass and premium mass table drop in December.
Net revenues at Mohegan INSPIRE in the December quarter reached US$63.5 million, up 2.1% on the September quarter, while an Adjusted EBITDA loss of US$4.2 million was narrowed from US$6.9 million in the September quarter.
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