Lenders have demanded the immediate repayment of a loan used to finance Mohegan’s $1.6 billion INSPIRE integrated resort in Incheon, South Korea.
The notice of loan acceleration was delivered to Mohegan shortly before their quarterly earnings call on Thursday.
Ari Glazer, Mohegan’s Chief Financial Officer, revealed during the call that the agent representing the lenders of MGE Korea Limited, the parent company of INSPIRE, had “accelerated the (holding company) debt.”
He added that the agent and Bain Capital, the primary lender, had “purported to take certain remedies, including the appropriation of shares in MGE Korea Limited.”
Mohegan is currently assessing the legitimacy of these actions and considering its response.
An acceleration clause in the loan agreement allows the lender to demand full repayment if the borrower fails to meet specific contract terms. While Glazer noted that this acceleration does not trigger a cross-default on other Mohegan debts, he acknowledged the need to evaluate the broader financial impact. He reassured investors that this event is unlikely to have a material effect on their North American properties in the first quarter.
Previously, Mohegan disclosed its efforts to refinance the approximately $275 million Bain-backed loan and other obligations related to INSPIRE in its New Year’s Eve annual report, aiming to avoid default.
Meanwhile, as reported by AGB, concerns have been raised about the company’s financial stability due to the slower-than-expected ramp-up of the INSPIRE integrated resort. The underlying issue appears to be high operating expenses tied to non-gaming facilities, such as the 15,000-seat arena, a multi-purpose indoor water park, a large-scale food court, and MICE facilities, as well as underwhelming gaming revenue. These factors may have contributed to a negative cash flow from both the gaming and non-gaming segments at INSPIRE Resort.
Despite these financial challenges, Mohegan officials expressed continued commitment to the INSPIRE project during the earnings call.
INSPIRE Resort generated $63.52 million in net revenue for 4Q24, with a negative adjusted EBITDA of $4.19 million for the quarter—a significant decline from the $10.89 million recorded in the final three months of 2023.
