MGM completes billion-dollar debt offering

TAGs: mgm growth properties, MGM Resorts

MGM Resorts International announced at the end of March that it was increasing an offer of senior notes to $1 billion, twice what had initially been offered. The money was to be used to pay off other debts and help with expansion plans, and the company has confirmed that the placement of all of the senior notes is now complete.

mgm-completes-billion-dollar-debt-offeringThe notes carry an interest rate of 5.5% and are expected to become due in 2027. The company said in a press release last Thursday that the proceeds will be used to purchase outstanding senior notes worth $1 billion that offer a rate of 6.75% and 5.25%. Those notes are scheduled to become due next year.

Any leftover funds after the purchase will go to general corporate expenses, which could include the payment of common stock dividends, the repurchase of common stock or refinancing other loan vehicles held by the company. MGM asserts that it could invest any net proceeds in “short-term interest-bearing accounts, securities or similar investments.”

Corey Sanders, MGM’s chief financial officer, stated in the release, “This transaction demonstrates our continued commitment to strengthening our balance sheet and improving our debt maturity profile. We are pleased with the continued support from the investment community, which allowed us to upsize the transaction to $1.0 billion and further reduce our cost of debt.”

As of December 31, MGM had outstanding debt of around $15.3 billion. Part of that was a credit facility for its MGM China subsidiary worth $2.4 billion. It has also purchased two properties in Ohio worth a combined $1.85 million, the Northfield Park racino (previously the Hard Rock Rocksino Northfield Park) and the Yonkers Raceway.

MGM adds in its release, “The Tender Offers were subject to a financing condition, which condition was satisfied upon the closing of the Offering. The early tender period in respect of the Tender Offers expired at 5:00 p.m., New York City time, on April 9, 2019 (the “Early Tender Deadline”). As of the Early Tender Deadline, $639,174,000 in aggregate principal amount of 6.750% Notes, or 63.92% of the principal amount outstanding, and $232,472,000 in aggregate principal amount of 5.250% Notes, or 46.49% of the principal amount outstanding, had been validly tendered and not withdrawn.

“In connection with the closing of the Offering, the Company has accepted for purchase in the Tender Offers $639,174,000 in aggregate principal amount of 6.750% Notes and $232,472,000 in aggregate principal amount of 5.250% Notes (collectively, the “Accepted Securities”). Those holders who validly tendered Accepted Securities prior to the Early Tender Deadline received the total consideration of $1,052.66 per $1,000 principal amount of 6.750% Notes tendered and $1,019.88 per $1,000 principal amount of 5.250% Notes tendered, as applicable, plus any accrued and unpaid interest on the 2020 Notes up to, but not including, today, which is the payment date. The withdrawal rights of tendering holders have expired.”


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