Mohegan seals $1.2B refinance loan, weeks after secured note issuance
The Mohegan Tribal Gaming Authority has finalised a substantial $1.2 billion (€1.12 billion) refinancing package, aiming to stabilise its financial standing following the loss of operational control over its South Korean venture, INSPIRE resort.
This comprehensive restructuring includes the issuance of $750 million (€697.5 million) in 8.25 percent first-priority senior secured notes due in 2030 and $450 million (€418.5 million) in 11.875 percent second-priority senior secured notes maturing in 2031. Additionally, Mohegan has secured a new five-year, $250 million (€232.5 million) revolving credit facility to bolster liquidity.
Mohegan approximately $226 million (€210.2 million) of its 13.25 percent senior unsecured notes due in 2027 for $250 million (€232.5 million) in new 2031 notes. An investor also agreed to swap an additional $90 million (€83.7 million) in 2027 notes for newly issued 13.25 percent senior unsecured notes due in 2029, extending maturity by at least one year beyond the escrow release requirement of 2028.
Furthermore, the Mohegan Tribe of Indians of Connecticut acquired $100 million (€93 million) of the 2027 notes and exchanged them for new 13.25 percent senior unsecured notes due in 2032, enhancing the company’s long-term debt maturity profile.
INSPIRE impact prompts financial reset
This financial overhaul follows Mohegan’s loss of control over the $1.6 billion (€1.49 billion) INSPIRE Entertainment Resort in Incheon, South Korea. In February, Bain Capital took over operational control after Mohegan defaulted on a $275 million Korean term loan. Despite citing missed financial targets rather than missed payments as the reason for the default, negotiations with lenders ultimately collapsed.
The INSPIRE resort, which opened in March 2024, features three five-star hotel towers, a 15,000-seat concert hall, expansive conference facilities, an indoor water park, and a foreigner-only casino. Despite its grandeur, the resort’s initial performance fell short of expectations, contributing to Mohegan’s financial strain.
In fiscal 2024, Mohegan reported record revenues of $1.9 billion (€1.77 billion) but also a net loss of $235 million (€219 million). The company cited ramp-up costs in South Korea and low table hold at INSPIRE’s casino as primary factors for the shortfall.
No debt maturity for next four years
Following the refinancing, Mohegan’s Chief Financial Officer, Ari Glazer, stated that the company now has “no material debt maturities for the next four years” and will continue to manage its capital structure prudently to reduce leverage and improve borrowing costs.
The tribe’s dedication to the Mohegan’s prosperity was made clear by Tribal Chairman James Gessner Jr., who said the refinance “strengthens our alignment with investors as we reinvest capital back into the company.”
Bain Capital still operates the INSPIRE resort. Yet, Mohegan’s refinancing efforts mark a significant step in addressing its financial challenges and repositioning the company for future stability and growth.
