Losing control of its Korean integrated resort INSPIRE could help US tribal casino operator Mohegan secure future funding to support domestic operations, according to ratings agency Fitch.
In a Monday note, Fitch analysts noted that, while the company is no longer associated with INSPIRE after defaulting under the terms of a US$275 million “Korea Term Loan” and seeing its main lender Bain Capital use the opportunity to assume operational control, Mohegan is also no longer part of the Korea credit facility after the term loan acceleration.
This, it said, could ultimately prove beneficial to the restricted group that directly controls the company’s US operations, which is due to finance a senior secured credit facility and guaranteed credit facility in late 2025.
The restricted group’s assets include flagship Mohegan Sun in Connecticut plus Mohegan Pennsylvania, Fallsview Casino Resort and Casino Niagara.
Issuing a first-time “B” Long-Term Issuer Default Rating (IDR) with a Stable Outlook, Fitch said the ratings reflect Mohegan’s restricted group EBITDA leverage of 5.0x to 5.5x, Mohegan Sun’s leading market position, growing digital results and positive free cash flow generation.
While the acceleration of the accelerated term loan at the Korean subsidiary is a challenge, “Fitch believes this will not lead to a restricted group default and may enable future funding to meet expressed guarantees.”
It added, “Fitch expects limited impact on the restricted group, as there are no cross defaults.”
The agency said it expects Mohegan to focus in future on its core properties following the tribulations of its recent expansion efforts into Korea, Las Vegas and Atlantic City. His will help simplify its capital structure and prompt greater financial discipline in future developments.
