MGM Announces $750M Public Offering of Senior Notes

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The prestigious gambling brand MGM Resorts has recently announced a $750 million public offering of senior notes due in 2028. The Nevada-based company has made this decision in order to boost its liquidity that was reeling from massive losses this year due to the pandemic.

According to MGM’s official statement, “The notes being offered will be general unsecured senior obligations of the Entity, guaranteed by substantially all of the Company’s entirely domestic subsidiaries that guarantee MGM’s other senior indebtedness, and equal in right of payment with all existing or future senior unsecured indebtedness of the Entity and each guarantor.”

An Increase from $500 Million

Last week, MGM announced plans for a public offering of $500 million in an accumulated amount of 4.75% senior notes due in 2028. The company later increased this initial figure to $750 million. The offering closed on October 13, securing this figure.

Barclays Capital Inc., J.P. Morgan Securities LLC, BofA Securities, Scotia Capital (USA), Citizens Capital Markets, Inc, and SMBC Nikko Securities American, Inc, will act as joint book-running managers. In addition, Comerica Securities, Credit Agricole Securities (USA) Inc., Union Gaming Securities, LLC, and Truist Securities will act as co-managers for the proposed offering.

According to MGM, the gambling company plans to use the net proceeds from the offering of the notes for corporate purposes. That might involve refinancing existing arrears and investing in short-term interest-bearing accounts and securities.

Huge Losses

By the end of last June, MGM’s overall debt was estimated at $11.4 billion, including $3.7 billion at the MGP Operating Partnership plus an outstanding balance of $2.5 billion at MGM China. The gambling company’s liquidity was placed at a little more than $8 billion, consisting of cash, cash equivalent, and amounts under its revolving credit facilities.

During the second quarter of last year, MGM reported a loss of $857 million, a stark contrast from the $43 million income it posted for the period between April and June 2019. Similarly, the loss per share was at $1.67 compared to earnings of 0.08 per share for the second quarter during 2019.

For the first half of this year, the gambling company shared an overall net loss of $50.4 million. During the same period in 2019, the company posted a total income of $74.9 million.

Later this month, MGM is set to post its third-quarter results. However, despite their casino establishments returning for operations after months of closure, the company is fearing huge losses due to the effects of the pandemic and the country-wide social distancing measures put in place to stop its spread.

BetMGM Doing Well Now

Indeed, MGM’s land-based casino establishments have struggled throughout the pandemic-led crisis. Fortunately, the company’s online betting venture, BetMGM, has continued to show measurable growth, with players shifting to online gambling during the pandemic.

According to a recent trading update released by GVC, BetMGM is performing better than expected so far for 2020. The projected net revenue for this year is now somewhere between $150 and $160 million.

MGM’s betting app is now available in eight states, capturing a market of 17% in those areas. The app launched in 2018 by MGM and GVC and was relaunched in 2019 with a new platform. The updated look seemed to work and, accidentally supported by the pandemic, doubled its market share in Las Vegas to 22% from the beginning of the year through August 2020.

In New Jersey, BetMGM also held 10% of the market share in online sports betting, alongside 24% of retail sports betting.

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