GGRAsia – MGM Resorts to redeem 2025 notes via US$850mln offering

MGM Resorts to redeem 2025 notes via US$850mln offering

Sep 04, 2024 Newsdesk Latest News, Top of the deck, World

U.S.-based MGM Resorts International, the parent of Macau casino operator MGM China Holdings Ltd, announced on Tuesday a public offering of US$850.0 million in aggregate principal amount of 6.125-percent senior notes, due in 2029.

“The offering of notes was upsized from the originally announced aggregate principal amount of US$675.0 million,” stated MGM Resorts.

“The transaction is expected to close on September 17, 2024, subject to customary closing conditions,” it added.

The parent said it intends to use the net proceeds from the offering to “repay indebtedness, including its outstanding 5.750-percent senior notes due 2025, and pay transaction-related fees and expenses, with the remainder for general corporate purposes”.

“Pending such use, the company may invest the net proceeds in short-term interest-bearing accounts, securities or similar investments,” said MGM Resorts.

The casino firm said the notes being offered “will be general unsecured senior obligations” of the company, “guaranteed by substantially all of the company’s wholly owned domestic subsidiaries,” and “equal in right of payment with all existing or future senior unsecured indebtedness”.

Fitch Ratings Inc said in a Tuesday memo that MGM Resorts’ ratings were “unchanged” following the refinancing announcement.

“Fitch anticipates [MGM Resorts'] EBITDAR [earnings before interest, taxation, depreciation, amortisation and rent] leverage for 2024 of around 5.4 times and EBITDA leverage of around 2.8 times,” stated the ratings agency.

The institution added: “EBITDAR leverage sensitivities for a downgrade would be 6.0 times.”

The memo mentioned that Fitch last rated MGM Resorts on March 25, when it assigned a ‘BB-’ issuer default rating, with a ‘stable’ rating outlook.

Fitch’s ‘BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time.

MGM Resorts reported net income of US$187 million for the second quarter, on consolidated net revenues of US$4.3 billion.

Last week MGM China declared the payment of a special dividend of HKD0.353 per share, amounting in aggregate to about HKD1.34 billion (US$172.0 million).

The main beneficiary in aggregate cash terms of the special dividend payment by MGM China will be MGM Resorts, which controls about 56 percent of MGM China’s issued share capital.

MGM Resorts is currently developing – as part of a consortium – the MGM Osaka casino resort in Osaka, Japan. The group is also developing a hotel project in Dubai, in the United Arab Emirates, where it expects to eventually be authorised to operate a casino there.

The company is among the gaming operator brands that have shown interest in investing a casino project in Thailand, if that Southeast Asia nation legalises casino gambling. If realised, such investment would be done via MGM China, said Bill Hornbuckle, chief executive and president of MGM Resorts, in the company’s second-quarter earnings call.