Lenders who financed Mohegan Gaming’s South Korea resort have taken control of the property. Bain Capital assumed ownership after calling for immediate repayment of hundreds of millions in debt.
Bain Capital has taken control of Inspire South Korea from developer-operator Mohegan Gaming & Entertainment (MGE).
MGE Chief Financial Officer Ari Glazer hinted at the takeover during the company’s fourth-quarter earnings call on February 17. “Just a few hours ago, we received notice… [that Bain had] accelerated the debt,” he stated.
By invoking the acceleration clause in its contract, Bain Capital demanded that Mohegan Gaming & Entertainment (MGE) immediately repay $275 million (£218.7 million/€262 million) in loans or relinquish control of the integrated resort (IR) in Incheon, Yeongjong Island, South Korea.
In a statement released yesterday, MGE acknowledged failing to meet certain financial covenant tests but clarified that it had not missed any principal or interest payments. “Specifically,” MGE stated, “the loan held by Bain Capital does not mature until May 2027, with no principal payments due before then.”
MGE also pointed to "near-term challenges typical of large-scale new resorts" but emphasized that the IR was well-positioned for "long-term success."
A rollercoaster first year
Inspire launched with much excitement in late February 2024. Nicknamed “the Las Vegas of South Korea,” the integrated resort featured a foreigners-only casino, 1,275 hotel rooms, a 15,000-seat arena, an indoor water park, meeting facilities, and a prime 4.36-million-square-meter location at Incheon International Airport.
Phase 1 alone cost $1.6 billion, including $666 million in foreign direct investment, according to the Korea JoongAng Daily. MGE’s fully owned Korean subsidiary planned to expand in phases through 2046, introducing an outdoor entertainment park, a 1,000-seat food court, and other non-gaming attractions.
During the grand opening, Inspire President Chen Si expressed confidence that the resort would transform Yeongjong Island into “a global tourism destination.”
Initially, Inspire appeared to be a success, contributing to MGE’s record-breaking second quarter in 2023, with companywide net revenue surging 21.4% to $504 million. However, enthusiasm quickly faded. Due to high launch costs and weak table game performance, the resort incurred losses exceeding $104 million.
MGE continues “good-faith” efforts
MGE is seeking to resolve the ongoing dispute. In a statement released yesterday, the company emphasized that it has made “several good-faith proposals to amend the financial covenants in line with market standards.”
“We have been and will continue to engage in good-faith negotiations with Bain Capital to reach a mutually beneficial resolution,” MGE stated. “We do not believe a change in control serves the best interests of the property, its employees, customers, lenders, or key stakeholders.”
Despite the ownership shift, Inspire’s operations remain unaffected, according to President Chen Si. The Korea Times reports that the South Korean resort is “pushing for growth” under its new management, which is taking an optimistic approach to the future.
