Macau gaming company MGM China Holdings Ltd has announced changes to its borrowing arrangements.
MGM China told the Hong Kong Stock Exchange on Friday that the company and its wholly owned subsidiary and Macao gaming concessionaire, MGM Grand Paradise SA, had reached an agreement with its lenders to reduce its total revolving credit commitments to HKD7.8 billion (US$1.0 billion) from HKD11.31 billion and increase its total term loan commitments to HKD15.6 billion from HKD12.09 billion – meaning that the amount it can borrow is unchanged.
MGM China said the sum of any revolving credit loans outstanding on June 22 in excess of HKD7.8 billion would be converted into term loans, repayable on March 31, 2022. The parties agreed that the maturity date of the amended credit facilities will be put back to June 26, 2022 from April 29, 2019, but that no revolving credit loans or term loans will remain outstanding after March 31, 2022 and no revolving credit or term loan commitments will be available after that date.
They also agreed that if MGM Grand Paradise fails to obtain an extension to its gaming concession by March 31, 2020, the revolving credit facility will be reduced to HKD4.68 billion on March 31, 2020. Any revolving credit loans in excess of HKD4.68 billion outstanding on that date will be pre-paid, together with the interest accrued, and the total revolving credit commitments will be reduced to HKD4.68 billion.
If any gaming concession extension arrangement expires before March 31, 2022, the revolving credit facility will be reduced to HKD4.68 billion on the date of the expiry of the arrangement.
MGM China said interest on the amended credit facilities would be charged at a floating rate based on HIBOR (the Hong Kong Interbank Offer Rate) plus a margin between 1.375 percent and 2.5 percent a year, depending on the leverage ratio of the company.
The company opened the MGM Cotai (pictured) in February and has suggested it will add a 900-room hotel tower extension to the property “some time in the next three years”.
Around the time of the HKD27-billion resort’s opening, analysts suggested the development would be paid off some time after 2020.
MGM China’s current Macau casino rights are due to expire in 2020. Earlier this month, the firm’s chief executive told GGRAsia the group would be “happy” for any opportunity for talks to get a two-year extension to the Macau gaming rights held by its Macau operating unit.
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"The [Macau] government has a lead in this subject in regards to what should be done after the [gaming] concessions expire. We will be first listening to what the government will say”
Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings