Mohegan Tribal Gaming Authority announced the issuance of $1.2 billion in new secured notes, following the recent loss of operational control at its INSPIRE Entertainment Resort in Korea to investment firm Bain Capital.
The company closed a private offering through its wholly-owned subsidiary Mohegan Escrow Issuer, LLC on April 10th, consisting of $750 million in 8.250 percent first priority senior secured notes due 2030 and $450 million in 11.875 percent second priority senior secured notes due 2031.
The proceeds have been placed in escrow, pending several conditions including the consummation of a private exchange with an investor for approximately $226 million of the company’s existing senior unsecured notes. Mohegan also expects to enter into a new five-year $250 million senior secured revolving credit facility with a banking syndicate.
If conditions are met, Mohegan will use the proceeds along with borrowings under the new credit facility and cash on hand to fund the redemption of outstanding secured notes due 2026 and repay loans from its previous revolving credit facility. Should conditions not be met by May 10th, the Escrow Issuer must redeem the notes.
This refinancing comes after Bain Capital assumed operational control of the INSPIRE Entertainment Resort in February. The takeover followed Mohegan’s default on a $275 million Korea Term Loan for the $1.6 billion integrated resort development. While Mohegan had attributed the default to failing to meet financial targets rather than missed payments, negotiations with lenders ultimately broke down.
During Mohegan’s fourth-quarter earnings call, COO Ari Glazer revealed that the company had “received notice from the agent for the lenders to MFGE Korea Ltd, the parent company of INSPIRE, that they have accelerated the HoldCo debt,” with Bain Capital taking “certain remedies including appropriation of the shares of MGE Korea Ltd.”
Despite these challenges, INSPIRE Entertainment Resort, which opened its non-gaming operations in November 2023 and its foreigner-only casino in February 2024, has shown steady improvement with net revenues reaching $63.5 million in the December quarter.
