Mohegan floats $1.2 billion secured notes after INSPIRE loss
The Mohegan Tribal Gaming Authority has announced the issuance of $1.2 billion (€1.12 billion) in new secured notes. The U.S.-based gaming operator is working to stabilise its finances following the loss of operational control at its flagship INSPIRE Entertainment Resort in South Korea.
The offering, completed on 10 April, was conducted through Mohegan’s wholly-owned subsidiary, Mohegan Escrow Issuer, LLC. The debt comprises $750 million (€698m) in first-priority senior secured notes due 2030 with an 8.25 percent interest rate and $450 million (€419m) in second-priority notes due 2031 carrying an 11.8 percent rate.
For the unaware, secured notes are debt instruments backed by specific assets, which serve as collateral to reduce the lender’s risk. If the issuer defaults, noteholders have a legal claim to the pledged assets, making such instruments generally safer than unsecured debt.
New credit facility in focus
The offerings are currently held in escrow, contingent on several conditions. These include a private exchange deal involving roughly $226 million (€210m) in Mohegan’s existing senior unsecured notes. Additionally, the company expects to secure a new five-year $250 million (€232m) revolving credit facility through a banking syndicate.
If all conditions are fulfilled, Mohegan intends to use the funds, along with borrowings from the new credit facility and cash on hand, to redeem outstanding notes due in 2026 and repay loans under its previous revolving credit facility. However, if the conditions are not met by 10 May, the notes will be redeemed by the Escrow Issuer.
This major refinancing follows Mohegan’s February 2025 default on a $275 million (€256m) Korea Term Loan linked to its $1.6 billion (€1.49bn) INSPIRE integrated resort near Incheon International Airport.
INSPIRE loan default: Mohegan’s major setback
The resort was envisioned as a landmark, foreigner-only casino and entertainment complex, but the development has faced significant financial and operational setbacks since its inception.
While Mohegan asserted the loan default stemmed from missed financial targets rather than failure to make payments, talks with lenders ultimately collapsed. Subsequently, Bain Capital, one of the resort’s major lenders, took control by appropriating shares of MGE Korea Ltd—the entity overseeing the resort.
In a quarterly earnings call, Mohegan’s COO Ari Glazer confirmed that Bain had accelerated the debt and exercised its legal remedies to seize control of the resort’s parent company. Despite the upheaval, INSPIRE has shown modest signs of recovery. It opened its non-gaming amenities in November 2023 and launched its foreigner-only casino in February 2024. The resort posted net revenues of $63.5 million (€59m) in the final quarter of 2023.
Mohegan’s refinancing efforts now signal a renewed attempt to regain financial stability after years of cost overruns and unmet projections that have plagued the INSPIRE project since its early stages.
