Moody’s Investors Service has put the credit rating of Mohegan Gaming & Entertainment, which is now mulling an IR bid in Tomakomai city and perhaps elsewhere, on review for a downgrade.
“The review for downgrade considers that [Mohegan] has not been able to reduce debt/EBITDA on a Moody’s adjusted basis to 4.5 times prior to the opening of MGM Springfield,” stated Keith Foley, a Senior Vice President at Moody’s.
Both Mohegan and Foxwoods may suffer from the results of increased competition in the US northeast from major competitors. MGM Springfield, for example, is explicitly promoting itself as a more conveniently located IR less than 90 miles from the more isolated Mohegan and Foxwoods facilities in Connecticut.
Moody’s, however, also views “as a long-term positive for the company” diversification efforts such as the establishment of a Mohegan casino resort in South Korea and other developments.
Contacted by Asia Gaming Brief, Mohegan’s Vice-President of Corporate Finance Christopher Jones commented, “The higher leverage is reflective of our commitment to Inspire Korea and the Korean government. With Mohegan becoming a 100 percent shareholder of Inspire Korea earlier in the year, we increased our equity contribution to the Incheon-based development, resulting in modestly higher leverage at the Mohegan parent company.”
He added, “Performance at Mohegan Sun, Connecticut, post the recent competitive incursion from southern Massachusetts, has been in-line to better-than-expected. Additionally, with the recent acquisition of the Niagara Casino bundle, we will see increased EBITDA diversity, starting in 2019. We believe that adjusting for these items and other on-going initiatives, we are more than comfortable with our leverage levels.”