MGM Resorts has announced the latest move, aimed at boosting the company’s available funds.
The Las Vegas-based casino operator has decided to issue senior notes worth $750 million, which are due 2028. The main reason behind this decision is to offset the significant impact that COVID-19 has on its operations and financial state.
Obtaining More Cash
MGT Resort posted an investor update in late March, revealing a successful completion of the senior note issuance, priced at 4.75% on a yearly basis.
According to the last month’s filing with the US Securities and Exchange Commission (SEC), the renowned operator explained it had been focused on controlling its costs and maintaining its current liabilities. The SEC filing also said that introducing any drastic measures for cutting expenses could have a negative impact on the loyalty of its guests and the company’s ability to keep the current employees and attract new ones.
After reopening its properties on September 30, 2020, after being closed since March, MGM Resorts resumed operation, although it couldn’t function at full capacity due to distancing measures. At this moment, it’s still not clear whether the operator will have to close its doors once more.
The financial report posted at the end of June revealed the total debt had amounted to $11.4 billion.
According to calculations made during the time of closure, the monthly cash spending has been estimated at around $270 million. Corporate and operating costs, interest, net rent, and capital expenditure are included in these expenses.
The Third Bond Offer Within a Year
This isn’t the first time MGM Resorts has made a move to boost its liquidity since the start of the pandemic. In April last year, the company issued the first public offering of senior notes, worth $750 million. In October, only a couple of months later, MGM resorts made another bond offer, also worth $750 million.
According to a filing from August 31, 2020, the casino operator had around $3.6 billion in cash. Cash and cash equivalents originating from the company’s MGM Growth Properties real estate investment funds and MGM China were not included in that sum.
Over the last couple of months, MGM Resorts has made a series of moves to secure the additional cash. One of them was a deal with MGM Growth. Under the provisions of this agreement, MGM Resorts will get cash in exchange for up to $1.4 billion of the operator’s current operating units. So far, MGM has received $700 million, with the option to get $700 million more in cash.
All these moves should help the renowned casino operator stay clear of any financial problems.
MGM Resorts is a global hospitality and entertainment giant, operating a number of properties in Nevada, Massachusetts, Illinois, Maryland, New Jersey, and Mississippi. The list of its resorts includes Mandalay Bay, Bellagio, MGM Grand, and Park MGM.