MGM Resorts Boosts Debt Offering to $850 Million, Initially Planned for $675 Million
MGM Resorts Raises $850 Million in Debt to Fund Growth and Strategic Investments
MGM Resorts International has announced an increase in its debt sale from $675 million to $850 million, aiming to raise additional capital for strategic investments and operational growth. The funds will support property upgrades and expansion efforts, including the completion of the MGM Grand room remodel, strong convention bookings in Las Vegas, and potential expansion in digital gaming and international markets.
The new debt, amounting to an aggregate principal amount of $850 million, carries a 6.125% interest rate and is expected to be repaid by 2029. Moody's has assigned a B1 rating to MGM Resorts International's senior notes, which is the same as the company's Corporate Family Rating. This rating was given due to MGM's large scale, strong presence on the Las Vegas Strip, a solid position within several regional markets across the US, and its strong footprint in Macau.
MGM Resorts also plans to use the funds for expenses and fees related to transactions. After applicable expenses, the company will have access to nearly $842 million from the new debt. The remaining extra net proceeds may be invested in short-term interest-bearing accounts, securities, or similar investments, pending the use of the funds.
In addition to this, MGM has a joint venture with Grupo Globo aiming at the Brazilian market, one of the most important in Latin America. The transaction is expected to close on September 17, 2024, subject to relevant customary closing conditions. The joint venture is looking into securing betting and iGaming licenses in Brazil.
MGM's strategic investments extend beyond its home market. The company is focusing on enhancing growth in its BetMGM digital gaming and online betting venture, aiming at sustainable EBITDA improvements. Additionally, MGM is looking to expand its footprint internationally, especially in Asia, to diversify revenue sources beyond Las Vegas.
This decision to increase the debt offering aligns with MGM's broader strategy of investing in both physical asset upgrades and digital platforms to strengthen future profitability and market position. The company is committed to creating value for its shareholders and continues to pursue growth opportunities that align with its strategic priorities.
[1] MGM Resorts International Press Release, dated July 21, 2023. [3] MGM Resorts International Investor Presentation, dated July 21, 2023.
The raised $850 million debt by MGM Resorts International will be utilized for strategic investments, including property upgrades, digital gaming expansion, and international market penetration, thereby reinforcing their finance portfolio in the casino industry. The company's financial maneuvers are strategically aimed at enhancing its revenue sources beyond Las Vegas and positioning itself for future growth and profitability.
