Mohegan's South Korea Casino Future a Concern as Loan Defaults Appear Imminent
The Mohegan Tribal Gaming Authority, known as Mohegan Gaming & Entertainment, is facing significant financial uncertainties regarding its operations in South Korea. The company disclosed in its financial results for the quarter ending September 30 that it is anticipating a default on its Korea Term Loan. This development has led to doubts about the company's ability to sustain its operations without resolving its debt challenges.
LISTEN TO THIS ARTICLE:According to the company's report, the Korea Term Loan has a face value of approximately $441.8 million and a book value of nearly $351.9 million. The loan, with an imputed interest rate of 25.7%, is set to mature in 2027.
Related: Foreigner-Only Casino at Mohegan Inspire in South Korea Opens SaturdayMohegan Gaming is actively exploring options to refinance this debt or secure amendments and waivers. However, it has acknowledged that such efforts depend on external factors, including market conditions, which the company cannot fully control.
Adding to these concerns is the impending maturity of the Korea Credit Facility, a separate loan tied to the South Korean property, scheduled for November. This loan has a face value of $761.6 million and a book value of $738.5 million.
It's secured by liens on key assets and equity interests of the Inspire Integrated Resort, subject to specific limitations. Together, these liabilities highlight the significant financial hurdles Mohegan Gaming faces in maintaining its operations.
Mohegan Inspire Entertainment Resort, located in Incheon, South Korea, operates a foreigner-only casino and other entertainment facilities. Despite its initial launch in February 2023, the property has struggled to achieve profitability.
More Business News
Revenue Success, but at a Cost
For the fiscal year ending September 30, the property reported net revenues of $163.3 million, including $62.2 million in the final quarter. However, the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were negative $49.5 million for the fiscal year and negative $6.9 million for the quarter, illustrating ongoing financial challenges.
The company is also contending with legal disputes tied to the construction of the Inspire resort. The general contractor for the project has initiated litigation over claims for cost reimbursements related to change orders and other issues.
Mohegan Gaming has responded with counterclaims, citing delays and the need for repairs as grounds for its position. The company has stated that it is too early to predict the outcomes of these legal proceedings or the potential financial implications.
Outside of South Korea, Mohegan Gaming continues to operate its flagship property, Mohegan Sun, in Connecticut, as well as other locations in North America. For the fiscal year ending September 30, the company reported a total net revenue of $1.9 billion, representing a 13% increase from the previous year. However, adjusted EBITDA declined by $50.9 million, ending the year at $349.0 million.
RELATED TOPICS: Business
Latest News
Most Read
Must Read
Interviews
When Helping Others Is a Life-Long Mission - An Interview with Gordon Moody CEO, Monica Shafaq
Dec 17, 2024
Interviews
Review this New Post
Leave a Comment
User Comments
Comments for Mohegan's South Korea Casino Future a Concern as Loan Defaults Appear Imminent