MGM China Announce Revolving Credit Facility

Macau casino operator MGM China Holdings Limited recently announced that a new revolving credit facility has been issued, which it will use to help its company survive the recent recession caused by the ongoing coronavirus pandemic.

According to news from Inside Asian Gaming and GGRAsia, the Hong Kong-listed firm used an official Tuesday filing to announce that the clause negotiated with lenders is worth around $301.85 million, but could be increased to slightly more than $503 million under ‘certain conditions.’

GGRAsia announced that MGM China Holdings Limited recently saw aggregated first-quarter net sales for its massive MGM Macau and MGM Cotai assets dropped by 63 percent year-on-year just $270.91 million while their related earnings before interest, tax, depreciation and amortisation reached a deficit of almost $12.91 million. In addition, travel restrictions placed in place after the 15-day coronavirus-related casino lockdown in Macau in February have reportedly caused the overall occupancy rate of these casinos to drop to just 36 percent as they burn through about $1.5 million per day together.

A majority owned by the giant American casino operator MGM Resorts International, MGM China Holdings Limited has allegedly outlined that it could use this new clause at any point up to one month before its maturity date of May 15, 2024, as long as it could supply evidence that its current $1.25 billion senior unsecured revolving credit facility has been depleted.

In addition, the Macau casino operator claimed that its new cash policy would be subject to a fluctuating annual interest rate based on the Hong Kong Interbank Offered Rate (HIBOR) alongside a margin based on its ‘leverage ratio’ which could hit as high as 2.75%. The source allegedly detailed that the deal also provides for an unconditional redemption of any unpaid monies if MGM Resorts International ceases to be the controlling owner of MGM China Holdings Limited.

MGM China’s filing allegedly read: “The proceeds of the revolving credit facility will be used for ongoing working capital needs and the general corporate purposes of the group.”