Bain Capital has taken control of Inspire South Korea from its developer and operator, Mohegan Gaming & Entertainment (MGE). During a fourth-quarter earnings call on February 17, MGE Chief Financial Officer Ari Glazer indicated that a takeover was forthcoming. “Just a few hours ago, we received notice… [that Bain had] accelerated the debt,” he stated. This action allowed Bain to demand an immediate repayment of $275 million in loans or to take over management of the integrated resort located on Yeongjong Island in Incheon, South Korea.
In a recent press release, MGE confirmed it had failed to meet certain financial covenant tests, though it also clarified that it had not defaulted on any principal or interest payments. MGE noted, “Specifically, the loan held by Bain Capital does not mature until May 2027, with no principal payments due before the maturity date.” The company also pointed to “near-term hurdles that are common in new resorts of this scale,” while asserting that it had set the integrated resort up for “long-term success.”
Inspire opened in late February 2024 to much fanfare and was described as “the Las Vegas of South Korea,” featuring a foreigners-only casino, 1,275 hotel rooms, a 15,000-seat arena, an indoor water park, and various meeting facilities, all sprawled over 4.36 million square meters adjacent to Incheon International Airport. The first phase of the project alone cost $1.6 billion, with $666 million coming from foreign direct investment, according to the Korea JoongAng Daily. MGE’s fully-owned Korean subsidiary plans to roll out additional phases through 2046, which will introduce an outdoor entertainment park and a 1,000-seat food court among other attractions.
At the launch, Inspire President Chen Si declared that the integrated resort would transform Yeongjong Island into “a global tourism destination.” Initially, Inspire seemed successful, contributing to MGE's record second-quarter net revenue of $504 million, a 21.4% increase from 2023. However, high initial costs and low table hold led to losses exceeding $104 million.
MGE is seeking to resolve its situation with Bain Capital. In the same release, the company mentioned having made “several good-faith proposals for amending the financial covenants that are consistent with market precedents.” They emphasized a commitment to negotiate with Bain Capital to reach a mutually satisfactory arrangement. MGE expressed that a change of control would not be in the best interests of the property, its employees, customers, other lenders, and key stakeholders.
Despite the ownership change, operations at Inspire are stated to be proceeding as normal, according to Si, who described the new management as “bullish.” The Korea Times reported that the resort is focused on growth, notwithstanding the recent transition in ownership.
