GGRAsia – Mohegan says going concern risk on poss Korea loan default

Mohegan says going concern risk on poss Korea loan default

Jan 02, 2025 Newsdesk Latest News, Rest of Asia, Top of the deck

Mohegan Tribal Gaming Authority says its “upcoming debt maturities and anticipated default” under its Korea Term Loan “have raised substantial doubt about the company’s ability to continue as a going concern”. It also says it is facing litigation from the main contractor on the development of its South Korea property.

The United States-based group – trading as Mohegan Gaming & Entertainment – runs the Mohegan Inspire Entertainment Resort (pictured) with foreigner-only casino at Incheon, South Korea. It gave the information on the default risk and the separate litigation in a Tuesday announcement on its results for the fourth quarter ending September 30, and full fiscal year.

As of September 30, the company’s Korea Term Loan – with discount based on imputed interest rate of 25.7 percent – had a face value of just under US$441.8 million, and a book value of just under US$351.9 million. The current maturity date on the loan is 2027.

The firm stated in its annual results: “Management plans to refinance in order to satisfy the upcoming debt maturities and to seek additional sources of liquidity in order to repay the Korea Term Loan and/or obtain waivers or amendments under such.

“These plans have not been finalised, are subject to market conditions, and are not within the company’s control and, therefore, cannot be deemed probable.”

At the end of its financial fourth quarter, Mohegan Gaming’s long-term debt had a face value of just over US$3.14 billion, and a book value of nearly US$2.96 billion. Within that, a Korea Credit Facility – distinct from the Korea Term Loan – matures in November this year. The Korea Credit Facility has a face value of US$761.6 million, and a book value of US$738.5 million.

The firm stated in its notes to its consolidated results: “The Korea Credit Facility is secured by liens on substantially all assets of, and equity interests in, Inspire Integrated Resort – subject to certain exceptions and limitations.”

In the final fiscal quarter, Mohegan Inspire generated net revenues of US$62.2 million, taking the property’s total net revenues for the fiscal year, to US$163.3 million.

Mohegan Inspire opened its non-gaming in November 2023, and its foreigner-only casino in February last year.

Mohegan Inspire’s adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) were a negative US$6.9 million for the fiscal fourth quarter, and a negative US$49.5 million for the fiscal year to September 30.

Mohegan Gaming also revealed it was facing litigation from its general contractor on the construction for Mohegan Inspire, stating that the contractor was claiming “amounts due from Mohegan Inspire for reimbursement of costs related to change orders and for certain other claims”.

The group added Mohegan Inspire had been “informed that the general contractor has brought some of these claims to litigation”.

It added: “We believe we have substantial defences and offsetting claims to the claims asserted by the general contractor, including for delays and repairs. However, it is too early for the company to determine the likelihood of an unfavourable outcome or to quantify a potential loss in any such litigation.”

The group also runs its flagship operation Mohegan Sun, in Connecticut in the United States, as well as operations in Canada.

For the full fiscal year to September 30, Mohegan Gaming’s net revenues of US$1.9 billion increased 13.0 percent from the prior year. Fiscal 2024 adjusted EBITDA of US$349.0 million decreased US$50.9 million from a year earlier.