With casino regulators in Greece awarding Mohegan Gaming & Entertainment (MGE) the rights to build a $9-billion casino resort in the country, it would seem prudent to ensure that the company has the funds in place to back up the project. Hard Rock International (HRI) tried, unsuccessfully, to demonstrate that MGE might not have the financial support it needed to move forward with the development, but gaming authorities in the country wouldn’t listen. Since then, MGE has had to acknowledge that it was getting behind in its financial responsibilities, and is apparently really desperate for a quick injection of cash. It is now seeking a short-term, $100-million loan as it struggles to pay its bills.
MGE already missed an April deadline for the payment of $19.7 million in interest on an existing line of credit. Now, according to Bloomberg News, the company has brought in investment bank Rothschild to act as financial advisers in order to broker a new “rescue loan,” which is reportedly being led by Credit Suisse Group AG. Rothschild could also be involved in helping MGE alter existing loan agreements and credits in order to improve its overall financial health.
The $100 million it seeks could give the lender a nice windfall, provided MGE doesn’t face any more financial uncertainty. The company is reportedly willing to go up to a yield of 14% on the credit facility, which would mature in October of next year. Earning $14 million in a year and a half, if Credit Suisse is confident enough in MGE’s ability to repay the loan, makes this a very enticing offer.
The money is reportedly needed to help MGE cover the losses incurred by the coronavirus. However, not everyone is ready to accept MGE’s assertion that it will be enough to allow for a rebound. Some investors have already put up resistance to the company’s efforts to seek financial assistance earlier this month, showing concern that MGE won’t be able to cover its additional debt. That delayed its ability to bring up to date its financial commitments (it was finally able to make the outstanding interest payment for $19.7 million), and the situation is apparently now becoming more critical.