Mohegan Gaming is grappling with a severe liquidity crunch, raising concerns about its ability to continue as a “going concern.” The financial strain stems from challenges tied to its ambitious Inspire resort project in South Korea.
In its fourth-quarter and fiscal 2024 report released on New Year’s Eve, Mohegan Gaming delivered both positive and concerning news.
Starting with the positive: the Uncasville, Connecticut-based tribal operator achieved a record $1.9 billion (£1.528 billion/€1.844 billion) in net revenue for fiscal 2024, reflecting a 13% year-on-year increase.
Chief Financial Officer Ari Glazer credited the revenue growth to “continued expansion in Mohegan Digital and contributions from Mohegan Inspire.” The latter, a $1.6 billion integrated resort in Incheon, South Korea, opened in March.
Last summer, Mohegan Inspire played a key role in delivering a record-breaking quarter, with $504 million in net revenue recorded between April and June.
“Going concern” threat related to South Korea
On the downside, Mohegan Gaming reported a drop in earnings before interest, taxation, depreciation, and amortization (EBITDA), which fell to $349.0 million—nearly $51 million less than the previous year. The decline was attributed to opening costs at the Mohegan Inspire resort and a low table hold at its foreigners-only casino. Despite generating $163.3 million in net revenue over 10 months, the $1.6 billion resort has yet to achieve profitability.
Adding to the pressure, Mohegan carries $3.1 billion in debt, including a $700 million Inspire-related loan maturing this year and another due in 2027.
With limited cash reserves, the company risks breaching its debt covenant under the $275 million Korean Term Loan facility, posing “significant risks to investors.”
To address these challenges, Mohegan is exploring options to refinance its Senior Secured Credit Facility, restructure the Korea Credit Facility, and secure additional liquidity to manage its obligations under the Korea Term Loan. However, according to the company’s 31 December report, these plans remain uncertain and depend on market conditions.
“As a result, management’s plans do not alleviate substantial doubt about the company’s ability to continue as a going concern,” Mohegan stated in a press release.
Analyst: South Korea a “difficult market”
In an interview on 2 January, Chief Financial Officer Ari Glazer acknowledged the company’s debt, describing it as “a meaningful amount to refinance.”
Despite the challenges, Glazer maintained a positive outlook. “Nothing has changed in the business. Inspire continues to ramp. The property is less than a year old. We’re pleased with the early results and believe there’s significant potential yet to be realized. We’re encouraged and remain optimistic,” he said.
However, Fredric Gushin, president and CEO of Spectrum Gaming, struck a more cautious tone. Speaking to the New London Day, Gushin highlighted the inherent challenges of operating in South Korea, where locals are prohibited from gambling—a restriction unlikely to be lifted anytime soon.
“Ultimately,” Gushin noted, “this is a difficult market.”
