Despite facing risk of default with gambling businesses shut down for a time to prevent the spread of the COVID-19 Coronavirus in the United States, Mohegan Gaming & Entertainment said it will build a casino when construction starts at the long-delayed 8-billion-euro ($8.68 billion) abandoned Hellenikon international airport site.
The company was awarded the license after the only other bidder, Florida-based Hard Rock International, was eliminated on a technicality, although it is appealing and said it expects to win in the courts.
Mohegan and Greek partner GEK TERNA have advanced to the next phase, said the news agency Reuters, with any work still up in the air during the appeal process that has added further delays to a project set back for years already.
“Mohegan Gaming Entertainment is fully committed to turning Greece into a top destination for entertainment and business conferences in Europe,” CEO Mario Kontomerkos said.
He’s a Greek-American who presented the company’s Inspire Athens plan that shows high-rise towers designed to be like the Caryatids on the Acropolis and soar over the site, the casino a critical part of the project.
The company is ready to start construction work once it wins the tender “despite the unprecedented impact of the pandemic on the gaming sector,” Kontomerkos added in a statement.
Mohegan’s plan is expected to attract hundreds of thousands of tourists and generate more than 7,000 jobs but that was before COVID-19 hit and casinos closed during lockdowns to keep people out of major gathering spots.
The effect has hit the company hard, with Moody’s Investors Service citing a risk of default with major capital losses bleeding away revenues.
The ratings agency downloaded MG&E – which it continues to refer by an earlier acronym, MTGA – into speculative territory with a “negative” outlook, said Casino.org, lowering the mark on the company's bonds to Caa2 from B3, meaning there are just three lower grades that could be assigned to the debt. Bonds with any of the three Caa grades are deemed to be in poor standing and carry “very high credit risk.”
“The disruption in casino visitation is pressuring earnings and results from efforts to contain the spread of the coronavirus … these efforts include mandates to close casinos on a temporary basis,” noted Moody's.
Despite its bid being disqualified earlier in the process, the Florida-based HRI expects a court challenge will bring the company the license for the casino.
“Hard Rock International will ultimately win the competition for Hellenikon…Hard Rock is the only company to have developed a project like this before and they will do it again,” a spokesman for the company, Michael Karloutsos, told The National Herald.
He said once Greece begins to gradually ease out a lockdown the country will need the economic bump the seaside project will bring.
“Hard Rock International is the only contender with a recognizable global brand and a world-wide network with staying power that can attract much needed additional tourists to Greece,” said Karloutsos.
Greece's highest administrative court was to hear HRI’s appeal, which had already been rejected by the Preliminary Appeals Authority and the Hellenic Gaming Commission.
“COVID-19 might have something to say about the timing of this going forward but I assure you that Hard Rock International is prepared to present our case and ultimately win either way, whether it is here in the Greek Supreme Administrative Court or the European Court,” he said, a prospect that could tie up the development even further.