Casino operator Mohegan closes on debt refinancing after warning of possible default in January
Mohegan Sun casino in Uncasville.
After warning about debt problems early this year, casino operator Mohegan Tribal Gaming Authority announced that it has issued $1.2 billion in new secured notes as part of a refinancing.
Following a $234.5 million loss in the 2024 fiscal year, Mohegan said in January it was at risk of defaulting on several loans. It attributed the loss primarily to costs related to the opening of the new $1.6 billion Inspire Entertainment Resort in South Korea.
On April 10, a subsidiary of the company, Mohegan Escrow Issuer LLC, closed on a private offering of $750 million of 8.25% first-priority senior secured notes due in 2030, and $450 million of 11.875% second-priority senior secured notes due in 2031.
The proceeds of the offering have been placed in escrow. The lending entities weren’t disclosed.
The offering is a “a first step in the expected closing of significant refinancing transactions,” which also include a private notes exchange with MS Digital Entertainment Holdings LLC, and an entry into a new, five-year $250 million senior secured revolving credit facility, the company said.
The credit facility is with "a syndicate of banks," according to the announcement.
Refinancing through secured notes allows a company to reduce its cost of borrowing or extend repayment timelines, which can free up cash flow for other operational needs, according to Investopedia.
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