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MGM China confirms US$500mln note offering

Macau casino operator MGM China Holdings Ltd is proposing to issue US$500 million in senior notes to boost its liquidity. Institutional broker BofA Securities Inc will act as a coordinator and is also among the purchasers, said the casino group in a Thursday filing to the Hong Kong Stock Exchange.

MGM China, controlled by United States-based firm MGM Resorts International, announced that it was pricing US$500 million of 5.25-percent senior notes due in June 2025. It said it estimated the net proceeds from the offering would be approximately US$493 million.

It will use the money “to repay a portion of the amounts outstanding under the revolving credit facility and for general corporate purposes,” said MGM China in its latest filing.

Moody’s Investors Service Inc stated this week it had assigned a “Ba3″ rating to MGM China’s proposed senior unsecured notes due 2025.

“The additional liquidity is beneficial to improve flexibility to manage in the current weak operating environment including reduced visitation levels, but the incremental debt is a credit negative increase in leverage to help further cover the company’s current cash burn,” said the ratings agency.

In connection with the note offering, MGM China had earlier disclosed some operating results for April. The firm said in a Wednesday filing that it generated operating revenues of HKD122.5 million (US$15.8 million) in April, and incurred cash operating expenses of approximately HKD346.1 million.

The company said that due to the Covid-19 pandemic its expenses were “significantly in excess of amounts being earned” at both of the group’s properties in Macau. MGM China runs MGM Macau (pictured) on the city’s peninsula and MGM Cotai in the Cotai casino district.

What’s more, macau casino operator Sands China Ltd has announced the issuance of senior unsecured notes due 2026 and 2030, with net proceeds of approximately US$1.5 billion to be used to bolster liquidity amid the coronavirus pandemic.

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