MGM China Holdings Propose US$500m Note Offering

Macau casino operator MGM China Holdings Ltd is proposing to issue senior notes worth US$ 500 million to boost its liquidity. Institutional broker BofA Securities Inc will be working as a consultant and is also among customers, the casino company said in a statement to the Hong Kong Stock Exchange on Thursday.

MGM China, owned by MGM Resorts International, a U.S.-based company , announced it was pricing $500 million of 5.25 percent senior notes due in June 2025. It said the net proceeds from the offering will be valued at around US$ 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,” MGM China said in its most recent filing.

Moody’s Investors Service Inc announced this week that MGM China’s proposed senior unsecured notes due 2025 had been given a “Ba3” grade.

“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.

MGM China had previously reported some operating results for April in conjunction with the note sale. The company said it generated operating revenues of HKD122.5 million ( US$ 15.8 million) in April in a Wednesday filing, and incurred cash operating expenses of around HKD346.1 million.

The company said its expenditures were “significantly in excess of amounts being earned” at both properties of the business in Macau due to the Covid-19 pandemic. MGM China runs MGM Macau (pictured) on the peninsula of the city and MGM Cotai in the Cotai Casino District.