Bain Capital, a Mohegan lender, takes over Inspire South Korea.

Bain Capital, a Mohegan lender, takes over Inspire South Korea.

Bain Capital, a Mohegan lender, takes over Inspire South Korea.

 Creditors who helped Mohegan Gaming pay for its resort in South Korea took control of the land.  Bain Capital took over after asking that hundreds of millions of dollars in debt be paid off right away.
 Mohegan Inspire Drawing
 Mohegan Gaming & Entertainment (MGE), which developed and runs Inspire South Korea, has lost control of the company to Bain Capital.

 In the middle of MGE's fourth-quarter earnings call on February 17, Ari Glazer, the company's CFO, hinted at a possible takeover.  "We were told just a few hours ago that Bain had accelerated the debt," he said.

 Bain could demand that MGE return $275 million (£218.7 million/€262 million) in loans right away or give up control of the integrated resort (IR) in Incheon, Yeongjong Island, South Korea by using the acceleration clause in its contract.

 Yesterday, MGE said in a news release that it "did not satisfy certain financial covenant tests." However, it also said that it has not missed a payment of principal or interest.  According to MGE, the loan owned by Bain Capital doesn't come due until May 2027, and there are no principal payments due before that date.

 MGE also talked about "near-term hurdles that are common in new resorts of this scale," but it said that the IR was set up for "long-term success."

 A crazy first year: In late February 2024, with a lot of excitement, Inspire opened.  It was called "the Las Vegas of South Korea" for a reason: it had a casino for foreigners only, 1,275 hotel rooms, an arena with 15,000 seats, an indoor water park, meeting rooms, and a great site on 4.36 million square meters at Incheon International Airport.

 The Korea JoongAng Daily said that Phase 1 alone cost $1.6 billion, which included $666 million in foreign direct investment.  MGE's fully owned Korean subsidiary was supposed to open in stages until 2046, with non-gaming features like an outdoor entertainment park and a food court with 1,000 seats.

 When the IR was first opened, Chen Si, President of Inspire, said that it would make Yeongjong Island "a global tourism destination."

 At first, Inspire looked like a big hit.  It helped MGE have a record-breaking second quarter last year, with net sales of $504 million, up 21.4% from 2023.  But the excitement didn't last long.  Inspire lost more than $104 million over time because of high starting costs and low table hold.

 MGE keeps up its "good-faith" efforts
 MGE wants to end the fight.  In its news release from yesterday, the company said it had made "several good-faith proposals for amending the financial covenants that are consistent with market precedents."

 The company wrote, "We have been and will continue to try to negotiate in good faith with Bain Capital to find a solution that works for both of us."  "We don't think the change-of-control is good for the property, its key stakeholders, its team members and customers, as well as other lenders."

 As for Inspire, Si says it is "business as usual" there now that a "bullish" new provider is in charge.  The Korea Times says the resort in South Korea is "pushing for growth, even though the ownership changed."