Management of U.S.-based Mohegan Tribal Gaming Authority said on Thursday that lenders to MGE Korea Ltd – the promoter of the Mohegan Inspire Entertainment casino resort in South Korea – have moved to take over the shares of MGE Korea.
“We have an update on a subsequent event following the earnings release this morning and just a few hours ago, we received notice from the agent for the lenders to MGE Korea Ltd, the parent company of Inspire, that they have accelerated the HoldCo debt,” said Ari Glazer, Mohegan’s chief financial officer, in comments on a call to discuss the group’s first fiscal quarter results.
“Further, the agent and Bain Capital, the principal lender, have purported to take certain remedies, including appropriation of the shares of MGE Korea Ltd,” he added.
The CFO stated: “We’re evaluating the propriety of these actions and considering the appropriate responses. The acceleration of the Korean HoldCo debt does not result in a cross default to any other debt” of the Mohegan group.
“Nevertheless, while we do not expect any material impact on our operations at any of our North American properties in the first quarter, we do need to evaluate the impact of these events on our overall financial reporting,” said Mr Glazer.
The management said it would not make any further comments on the matter during the call, adding that it would “provide subsequent disclosure in due course”.
“Beyond our statement, we have no further comment on Inspire at this time. We are still evaluating the information that we literally received this morning,” said the executive.
In mid-January, Mohegan said the group would be in default under the terms of a loan related to Mohegan Inspire, known as the ‘Korea Term Loan’.
The parent said that MGE Korea, the borrower under the Korea Term Loan, was required to satisfy certain financial covenant tests with respect to the period ended September 30, 2024.
“When the results of the financial covenant test are delivered to the lender following the issuance of this report, certain of the financial covenant tests will not be met, which will be an event of default under the terms of the agreement,” stated Mohegan at the time.
MGE Korea – a wholly-owned subsidiary of Mohegan – is the parent company of Inspire Integrated Resort.
The Korea Term Loan is secured by 100 percent of MGE Korea’s share capital pursuant to a pledge by its parent, MGE Korea Holding III Ltd, and a debenture over the assets of MGE Korea – subject to certain exceptions and limitations –, which includes the share capital of Inspire Integrated Resort, according to corporate filings.
Mohegan had stated previously that if the lenders exercised “their right to accelerate the repayment of outstanding indebtedness”, it “would seek additional sources of liquidity”.
But it added: “However, if we were unable to obtain alternative financing on acceptable terms, the lenders may choose to exercise additional rights and remedies, which may include taking possession of the pledged collateral.”
According to Mohegan, the only obligor on the Korea Term Loan is MGE Korea, and the obligations under the loan facility are not secured by any assets other than those of MGE Korea and certain assets of its parent, MGE Korea Holding.
“A default or acceleration of obligations under the Korea Term Loan does not constitute a default under any of the other debt agreements of the company or any of its subsidiaries,” noted Mohegan in a previous filing.
Lenders move to take over Mohegan’s stake at Inspire resort in S. Korea: firm
