Private equity firm now controls Korean casino hotel as MGE Korea nears default
Private equity firm Bain Capital has taken control of the Inspire Korea casino hotel from Mohegan Gaming & Entertainment (MGE), a move anticipated by the tribal gaming operator. The takeover comes as Inspire faced the looming threat of loan default, prompting Bain, the primary lender to MGE Korea Ltd., to intervene. This entity serves as the holding company for the Korean integrated resort.
During MGE’s first-quarter earnings conference call, CFO Ari Glazer mentioned that an agent representing Inspire’s creditors, including Bain, took steps to expedite the venue’s debt, paving the way for Bain’s takeover. Glazer added that MGE is currently assessing the appropriateness of these actions and considering suitable responses.
Bain Capital stated that the takeover aims to stabilize Inspire’s finances and poses no risk to employees or day-to-day operations at the venue. “Bain Capital has been a trusted partner and investor since the early development stages of the INSPIRE project, maintaining a strong and collaborative relationship with us,” a representative of the property said in a statement. “We believe that this transition will further solidify our partnership and accelerate INSPIRE’s sustainable growth.”
Boston-based Bain Capital was co-founded by former Massachusetts Governor Mitt Romney, who also served as a US Senator from Utah and was the Republican presidential nominee in 2012.
Mohegan Could Be Better Off Without Inspire
Located near Incheon International Airport on Yeongjong Island, Inspire opened 11 months ago but has struggled since, while rival venues thrived. MGE Korea Ltd. was structured as a separate entity from its parent company, MGE, meaning that any default by the former would not directly impact MGE’s US operations. However, some analysts noted that the missteps in South Korea negatively affected MGE’s credit rating and debt prices.
Bain has extensive experience in South Korea, having previously invested in various sectors, including consumer goods, technology, healthcare, and financial services. “Bain Capital has a long-standing presence in Korea, with a track record of successful investments,” according to the statement. “The firm has played a key role in helping Korean companies expand globally, including investments in Carver Korea, Hugel, and Classys.”
Bain’s Experience in Gaming
The relationship between the casino gaming and private equity industries runs deep, and Bain Capital has been involved in several such ventures. Bain has leveraged its investment expertise in the gaming sector to drive growth and innovation for various companies, including Gamblit Gaming, Scientific Games, Game Logic, Thumbplay, Zynga, and Twin River Casino.
While Bain highlighted its investments in non-gaming luxury resorts globally, the firm did not specify its long-term plans for South Korea, including the duration of its management of Inspire or whether it will bring in a gaming partner to assume those responsibilities.
