MGM Resorts and Partner Secure $950M Refinancing Deal for MGM Macau

Debt attached to MGM Macau, owned by MGM Grand Paradise S.A., a 50/50 joint venture partnership involving Las Vegas-based global hospitality company MGM Resorts International and Hong Kong-based businesswoman Pansy Ho Chiu-king, has been refinanced to the tune of $950 million through a new senior secured credit facility.

August 4, 2010
By Barbra Murray, Contributing Editor

Debt attached to MGM Macau, owned by MGM Grand Paradise S.A., a 50/50 joint venture partnership involving Las Vegas-based global hospitality company MGM Resorts International and Hong Kong-based businesswoman Pansy Ho Chiu-king, has been refinanced to the tune of $950 million through a new senior secured credit facility.

MGM Grand Paradise completed development of MGM Macau, sited along the South China Sea, in December 2007 at a cost of approximately $1.3 billion. In addition to a vast amount of gaming space, the premier casino-hotel resort features nearly 600 guestrooms in a 35-story high-rise, approximately 15,000 square feet of meeting space, a spa, two retail outlets, restaurants and entertainment facilities.

A long list of financial institutions from across the globe comprised the consortium that provided MGM Grand Paradise with the refinancing package, which came in the form of a $550 million term loan and a $400 million revolving credit facility, both of which mature in July 2015. Among the banks involved in the deal were lead arrangers Banco Comercial Portugues, S.A., Macau Branch, JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding Inc. and Sumitomo Mitsui Banking Corporation.

“We have made significant progress in building our revenues at MGM Macau, which has resulted in a positive impact on our cash flow,” Jim Murren, Chairman and CEO of MGM Resorts, noted in a prepared statement. “We view the significant investor demand on this transaction as validation of our progress.” In addition to replacing the previous debt, the new credit facility leaves the resort owner with a bit more liquidity.

The casino market in Macau is thriving. According to the government’s Statistics and Census Service, gross gaming revenue skyrocketed 57.1% from the first quarter of 2009 to the first quarter of 2010. According to MGM Resorts’ recently released quarterly earnings report, MGM Macau earned operating income totaling $40 million in the second quarter of this year, an astounding achievement given the property’s $8 million operating loss in the second quarter of 2009.