1.04 Trillion Senior and Mezzanine PF Fully Raised
Hanwha Construction 100 Billion CB Investment
Business Risks Persist Amid COVID-19 Resurgence
[Asia Economy Reporter Lim Jeong-su] The fundraising of 1.8 trillion KRW for the construction of the Yeongjongdo Inspire Integrated Resort, a mega development project combining a foreigner-only casino, hotel, convention center, and arena (complex cultural performance hall), has been completed. The project, which had been sluggish due to COVID-19, is expected to accelerate rapidly as financing has been secured.
According to the investment banking (IB) industry on the 29th, Inspire Integrated Resort Co., Ltd. (Inspire) has completed the recruitment of a project financing (PF) lending syndicate worth 1.04 trillion KRW. The loan maturity is four years, and investors were recruited by dividing the loans into senior tranche of 740 billion KRW and mezzanine tranche of 300 billion KRW according to repayment and collateral priority. Hana Financial Investment, NH Investment & Securities, and KB Securities participated as lead financial arrangers.
Hanwha Engineering & Construction, which is participating as the construction company for the resort project, has agreed to acquire 100 billion KRW worth of subordinated convertible bonds (CB). Inspire, the developer, will directly invest 660 billion KRW as equity capital. The total funds raised amount to 1.8 trillion KRW.
Inspire’s major shareholder is the US-based Mohegan Group, with its affiliate Mohegan Gaming Advisors, LLC holding 100% of the shares. The previous major shareholder, MGE Korea, transferred its shares in February last year, changing the major shareholder to Mohegan.
The Inspire Integrated Resort is a mega resort project to be built on a site of 461,661 square meters (approximately 139,652 pyeong) in the northwest international business district (IBC)-III near Incheon Airport Terminal 2. The resort will consist of a hotel, casino, convention center, and arena, with a scale of one basement floor to 12 floors above ground.
This project, planned since the early development of Yeongjongdo, had been delayed for a long time due to shareholder disputes and concerns about feasibility. The stalled project received approval from the Ministry of Culture, Sports and Tourism in March this year, confirming the postponement of the 1A phase opening schedule. The 1A phase includes a 5-star hotel (1,256 rooms), a 15,000-seat arena, and a foreigner-only casino.
Even after the schedule was postponed, the project faced difficulties in raising funds due to COVID-19, causing slow progress in resort construction. However, with the completion of this financing, the project is expected to gain momentum again. Hanwha Engineering & Construction is currently carrying out the resort construction with a target completion date of March 2023. They also provided a completion guarantee agreement to the PF lending syndicate, promising to complete construction within 21 months. If approval for use is not obtained from local governments or other authorities within the deadline, they will be responsible for the PF debt.
An IB industry official commented, "Although financing has been secured, concerns among investors about the project’s feasibility after opening are expected to continue as COVID-19, including the Omicron variant, shows no signs of subsiding."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
