Bain Capital has rejected Mohegan Tribal Gaming Authority’s proposals to amend the financial covenants of a loan held by MGE Korea Limited, the parent company of Mohegan INSPIRE Entertainment Resort in South Korea.
In an official statement, Mohegan emphasized that its proposals were in line with ‘market precedents.’ However, Bain Capital dismissed the suggestions and instead presented counter-proposals that would prioritize large payments to the private equity firm before other lenders to the INSPIRE project.
Despite this, Mohegan, which has made significant investments in the development of INSPIRE, reaffirmed its commitment to negotiating in good faith with Bain Capital in the hope of finding a mutually agreeable solution. The company also stated that it believes Bain Capital’s decision to take a change-of-control action is not in the best interest of the resort, its employees, customers, or other stakeholders.
Bain Capital assumes control of INSPIRE
Mohegan also confirmed receiving notices from Bain Capital indicating that the lender has accelerated the mezzanine loan for MGE Korea Limited, effectively taking control of the INSPIRE project. This move comes after the resort’s opening in February 2024, which Mohegan described as the launch of a ‘groundbreaking integrated destination’ that is rapidly establishing itself as a premier resort in Asia.
Bain Capital, an American private investment firm based in Boston, has been involved with the project since its early stages.
While Mohegan acknowledges that INSPIRE is facing some near-term operational challenges typical of large-scale resorts, the company remains optimistic about the resort’s long-term prospects. Mohegan believes the property is on track to achieve its full capacity, but it requires additional time. ‘We’ve put the essential components in place for long-term success, and the property needs more time to reach its full potential,’ the company stated.
In response to taking control of the project, Bain Capital emphasized that the move underscores its commitment to the long-term stability and growth of the resort. The firm has pledged support to improve INSPIRE’s financial performance and enhance guest experiences.
No missed payments
Mohegan further clarified that, while certain financial covenant tests were not met, no principal or interest payments have been missed. The loan, which is held by Bain Capital, does not mature until May 2027, with no principal payments due before that time. Despite this, Mohegan has been engaged in discussions with Bain Capital to amend the financial covenants to better align with the current situation of the resort.
Despite the challenges, Mohegan remains hopeful about reaching a resolution with Bain Capital that would allow it to continue as a key partner in the project. ‘We have been, and will continue to be, committed to negotiating in good faith with Bain Capital to find a mutually agreeable solution that allows us to remain partners with the people of Korea and our various stakeholders,’ the company said.
