Analyst Flags Weakening Credit Trends for Mohegan Gaming

At the start of the new year, the leading gaming, hospitality and entertainment company, Mohegan Gaming and Entertainment, announced that the Mohegan Tribal Gaming Authority entered into a fourth amendment to credit agreement and BIA loan agreement.

The announcement came at a time when the company recorded performance under the expectations of its Inspire Korea casino resort. The Authority confirmed it has “amended certain provisions of the Existing Credit Agreement to remove a prohibition on going concern language in our audited financial statements.”

The move captured the attention of experts with one analyst highlighting the importance of the company’s South Korea integrated resort.

The Company’s Credit Profile Is Weakening

Gimme Credit’s expert analyst, Kim Noland, who was recently quoted by Casino.org, commented on the topic. He spoke about Mohegan’s declining credit profile, explaining that it is the result of failure to secure a waiver and the imminent maturity of significant obligations. As an example, Noland pointed to a substantial $1.175 billion in second-lien-secured bonds due in a year. “We had found those bonds attractive when trading at 13% but we rate them underperform at the current yield-to-worst of 8.3%,” he explained.

“Mohegan’s credit profile is deteriorating as a result of its inability to get a waiver and significant upcoming maturities, including the company’s major public maturity $1.175 billion of second lien secured bonds) a year from now,“

Kim Noland, analyst at Gimme Credit

Noland also shared his view regarding Mohegan’s recent announcement about the credit amendment. “Further, covenant violations or default under the INSPIRE holdco term loan won’t trigger defaults in other borrowing facilities of Mohegan or its subsidiaries,” he explained.

Mohegan’s South Korea Resort Is an Important Asset for the Company

Notably, the analyst highlighted the importance of Mohegan’s casino resort in South Korea for the company. Noland recognized that Inspire Korea is critically important when it comes to the company’s overall credit profile. He added that the casino resort, while bigger than its rival, Paradise City, isn’t nearly as profitable. “The company’s auditors required a going concern exception in its latest quarter report, highlighting the upcoming November 2025 maturity of the Korea Credit Facility,” the analyst explained.

Recently, Mohegan reported inspiring Q3 financials, revealing that its South Korean casino resorts continues to gain traction. Upon announcing the results, the company said that its casino resort reported $62.2 million in net revenues in the three months ended September 30, 2024. This marked an increase quarter-over-quarter, considering that net revenue in Q2 halted at $60.1 million.