Operator News
South Korea – Mohegan close to securing all the funding for Inspire Korea
By Phil - 12 February 2021
Mohegan Gaming & Entertainment is ‘optimistic’ it will secure the financing needed to complete the $1.6bn build of its Inspire Korea Korean integrated resort project within the next quarter, adding that it will fast track $200m earmarked for the second phase of the project to use for the first.
Having put up US$300m of its own, Mohegan is looking for a total of US$900m from Korean investors, as well as US$200m from Incheon International Airport Corp for infrastructure and US$200m from bank loans. Mohegan’s Vice President of Corporate Finance Chris Jones confirmed that construction of the first phase of the resort had ‘slowed down materially’ due to the ffects of the global pandemic but that it was confident of finalising financing from ‘blue chip’ Korean companies.
Mr Jones said: “We are getting into a lot of long-form documentation at this point. Korea is in a very heightened sense of COVID restrictions. Even though they have a lower number of cases in that market they are very wary about it, so as a result we’ve seen things slow down. But we are optimistic that we will be able to close on the financing over the next couple of months and get construction ramped up again.”
The first phase will include a five-star hotel with 1,256 rooms, a 15,000-seat arena, convention halls, and a foreigner-only casino, costing an investment cost of $1.29bn. The gaming floor will boast 150 table games and 700 slots. There will also be a hemispherical dome featuring over 48,000 sq. ft. of climate-controlled indoor pool space with rides, dining and retail. The second phase will include a Paramount Picture-branded theme park due to open in 2025. The fourth and final phase won’t open until 2031.
The announcement came during an investor call regarding the US operator’s financial performance in its first fiscal quarter ended December 31, 2020.
Mohegan Gaming operates Mohegan Sun in Uncasville, Connecticut, Mohegan Sun Pocono in Plains Township, Pennsylvania and the MGE Niagara Resorts in Niagara Falls, Canada. Various closures dictated by the global pandemic saw net revenues plunge to $230.8m from $399.1m in the prior year period, marking a 42.2 per cent decrease.
Mario Kontomerkos, President and Chief Executive Officer of MGE, said: “As we move through the early part of 2021, we have an eye on a broader industry recovery and I am confident in MGE’s position to benefit from it. Performance in the fiscal first quarter was challenging as COVID cases climbed substantially in virtually all of our markets, but the pressure we observed on our revenues and profitability largely began to reverse itself in late December with positive momentum observed throughout January, most notably at Mohegan Sun. Despite these challenges, adjusted EBITDA margin at the flagship property grew versus the prior-year quarter, reflecting the permanence of significant cost reduction efforts undertaken over the last year. Subsequent to the end of the quarter, MGE successfully completed its refinancing which extended our nearest maturities, increased our financial flexibility, and provided us with ample liquidity as we move forward. We remain quite positive that our business has been optimized to benefit from what we foresee to be significant pent-up demand for leisure consumption in the months ahead.”
