GGRAsia – MGM China granted fresh US$302mln revolving credit

MGM China granted fresh US$302mln revolving credit

May 27, 2020 Newsdesk Latest News, Macau, Top of the deck

Macau-based casino operator MGM China Holdings Ltd has been granted a new HKD2.34-billion (US$503-million) revolving credit facility, the firm announced on Tuesday.

It has a final maturity date on May 15, 2024, MGM China told the Hong Kong Stock Exchange in a filing. The facility also includes “an increase option” under which the company may increase the credit amount to up to HKD3.9 billion, subject to “certain conditions”. MGM China did not provide detail on what they were.

The revolving credit facility will bear interest at a fluctuating rate per annum based on HIBOR (Hong Kong Interbank Offered Rate), plus a margin in the range of 1.625 percent to 2.75 percent. The latter margin “will be determined by the company’s leverage ratio,” said MGM China.

The firm added: “The revolving credit facility will be available for drawing from the date of the facility agreement to and including the date falling one month prior to the final maturity date (subject to satisfaction of conditions precedent, including evidence that [MGM China’s] existing HKD9.75 billion senior unsecured revolving credit facility has been fully drawn).”

MGM China’s filing stated that the new revolving credit facility would have to be prepaid if U.S.-based casino operator MGM Resorts International “ceases to be the legal and beneficial owner directly or indirectly of more than 50 percent of the issued share capital” of MGM China.

The proceeds of the revolving credit facility will be used for ongoing working capital needs and general corporate purposes of the group, according to MGM China’s filing.

It was announced in April that MGM China’s first-quarter net revenues were just under US$271.9 million, down 63 percent from the prior-year quarter. The firm reported a US$22.0-million quarterly loss in adjusted earnings before interest, taxation, depreciation, amortisation, and restructuring or rent costs (EBITDAR) for the first three months of 2020, compared to a positive US$192.8 million in the prior-year period.

The negative result came against the background of the Covid-19 pandemic that has seen shutdowns or severe decline in casino business across the world.

MGM China is undergoing a leadership change. Longtime chief executive Grant Bowie is retiring with effect from May 31. The company is yet to name a successor for the CEO post.