US tribal casino operator Mohegan has described the transfer of control of Korea’s INSPIRE integrated resort to its main lender Bain Capital as not being in the best interests of the property or stakeholders.
It has also accused the private investment firm of making demands that were unfair to other lenders during negotiations around potential amendments to financial covenants.
Bain Capital confirmed earlier this week that it had assumed control of INSPIRE after appropriating Mohegan’s shares in the resort’s operating entity, MGE Korea Ltd. Mohegan 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 and was in discussions with lenders around a solution.
The company made a point at the time of highlighting 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.
In a statement issued Wednesday, Mohegan doubled down on that stance and accused Bain of ignoring “market precedents”.
“While Mohegan did not satisfy certain financial covenant tests, we have not missed a payment of principal or interest,” it said. “Specifically, the loan held by Bain Capital does not mature until May 2027, with no principal payments due before the maturity date.
“We made several good faith proposals for amending the financial covenants that are consistent with market precedents. However, Bain Capital has dismissed those proposals and provided counterproposals that would result in Bain Capital receiving large payments ahead of other INSPIRE lenders.”
Mohegan also noted that it had specifically been awarded a casino license by South Korean authorities in 2016 due to its “family-owned approach and foundational commitment to regulatory compliance, public safety and community engagement.
“Since developing and launching INSPIRE, we have applied our extensive operational experience in the gaming industry, including providing INSPIRE with essential services in the areas of compliance, finance, technology, human resources and marketing,” it said. “We were committed to the long-term success of INSPIRE and to the continued expansion of the Incheon site.
“We have been and will continue to attempt to negotiate in good faith with Bain Capital to find a mutually agreeable solution that allows us to be continuing partners with the people of Korea and our various stakeholders.
“We do not believe the change-of-control pursued by Bain Capital is in the best interests of the property, its team members and customers, other lenders and various key stakeholders.”
Mohegan acknowledged that “near-term” hurdles had impacted performance in the months since its November 2023 launch – the casino itself didn’t open until February 2024 – but said this was common in new resorts of such scale.
“Mohegan believes we put the essential components in place for long-term success and the property needs more time to achieve its full potential,” the company added.
Mohegan’s response follows a statement from Bain Capital on Monday in which it confirmed it was now in control of INSPIRE but would retain the property’s existing management team “to ensure business continuity while implementing enhancements that will strengthen the resort’s market position.”
INSPIRE’s President, Chen Si, told Inside Asian Gaming on Tuesday that communications with Bain Capital representative suggested the new owner was happy with the property’s early performance and ramp trajectory.
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