Mohegan INSPIRE, South Korea’s integrated resort that opened to considerable fanfare last year, now faces a potential default. According to Mohegan Gaming’s fourth-quarter and fiscal 2024 report, the company said it acknowledged imminent default risks at the INSPIRE resort. It added that it is experiencing a severe liquidity crisis that could endanger its operational status.
The $1.6 billion integrated resort, which launched in November 2023, has exhibited slower-than-anticipated growth, triggering concerns about the company’s financial stability. September quarter results showed Mohegan INSPIRE’s net revenue at just $62 million, falling short of Niagara Resorts, the company’s other non-US property, which generated $63 million during the same period.
Refinancing plans eyed
The Mohegan Tribal Gaming Authority, INSPIRE’s parent organisation, disclosed in its FY24 annual report that it faces looming debt maturities and expects to default on its Korea Term Loan.
The resort’s financial challenges are further emphasised by its negative EBITDA, with earnings before interest, taxation, depreciation and amortisation dropping by approximately $51 million, partly due to opening costs and poor table performance at the foreigners-only casino.
Despite generating $163.3 million in revenue over ten months, the resort has yet to achieve profitability. Adding to its troubles, the company faces legal disputes with the primary contractor responsible for the South Korean property’s development.
The organisation plans to refinance a separate Korea Credit Facility worth $704 million, due in November 2025. ‘These plans have not been finalised, are subject to market conditions and are not within the company’s control,’ Mohegan wrote in a press release. Management has warned that without successful refinancing, the company may lack sufficient liquidity to meet its debt obligations.
INSPIRE’s appeal strong, but profits elusive
However, there are some positive aspects to consider. The Connecticut-based tribal operator achieved record company-wide net revenue of $1.9 billion for fiscal 2024, marking a 13 percent year-on-year increase. Meanwhile, INSPIRE’s casino visitation data demonstrated a steady growth throughout the year, with the number of visitors rising from 10,771 in February 2024 to 32,043 in September 2024.
Chief Financial Officer Ari Glazer attributed this growth primarily to expansion in Mohegan Digital and revenue from Mohegan INSPIRE, stating the revenue surge was ‘primarily due to continued growth in Mohegan Digital and revenue from Mohegan INSPIRE’. The South Korean venture notably contributed to a record quarter last summer, helping achieve net revenue of $504 million from April through June. Despite these achievements, the looming default risk poses a significant threat to the company’s operations and future stability, with particular concerns about its ability to meet upcoming financial obligations.
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