Greece – Moody’s warns of potential default by Mohegan GamingBy Phil - 5 May 2020
Moody’s Investors Service believes that Mohegan Gaming & Entertainment, the Connecticut-based casino group who won the license for an E8bn casino at the former Hellenikon International Airport in Greece, is at risk of default.
Earlier this month, Mohegan missed a $19.7m interest payment with the operator claiming it didn’t make the payment as it is trying to conserve cash. It said it would be able to cover that $19.7m before the end of a 30-day grace period.
Moody’s said: “The disruption in casino visitation is pressuring earnings and results from efforts to contain the spread of the coronavirus. These efforts include mandates to close casinos on a temporary basis. In Moody’s opinion, MTGA’s failure to make the scheduled interest payment of approximately $19.7m due on April 15, 2020 with respect to the company’s 7.875 per cent senior notes due 2024 reflects in part MTGA’s highly uncertain operating environment.”
“Ratings also reflect the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos, including MTGA’s casino properties, once this crisis subsides,” it added. “Additionally, because of approaching October 2021 maturities and weak earnings, MTGA’s refinancing and default risk is high. More specifically, MTGA’s continued exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions, and makes it vulnerable should the outbreak continuing to spread.”
CEO Mario Kontomerkos said: “Mohegan Gaming Entertainment is fully committed to turning Greece into a top destination for entertainment and business conferences in Europe.”
He added that ‘despite the unprecedented impact of the pandemic on the gaming sector’ the operator was ready to start construction work when allowed.