MGM Resorts International aims to raise $500 million via senior notes to cover debt
Joining a growing list of companies heading to capital markets to raise funds, American casino operator MGM Resorts International has announced plans to collect up to $500 million via senior notes to cover its debt and pay off some bills.
The NYSE-listed casino giant is offering senior notes worth $500 million due in 2028. The company’s intention to collect up to $500 million in return for the senior notes represents a considerable jump from its initial plan of raising $500 million. The newly announced senior notes are being offered at an interest rate of 4.75 per cent, and the exercise is expected to conclude by Tuesday next week.
The funds will be used by MGM Grand operator to pay down its debt and clear some bills, in addition to covering operational expenses. A fraction of the funds will be used to pay short-term interest and securities.
The casino operator did not mention the coupon on the senior notes in documents filed with the US Securities & Exchange Commission (SEC). Earlier in May, the company sold $750 million in senior notes due in 2025.
At the end of the second quarter, MGM Resorts International was burdened under a debt pile of $11.4 billion. However, it also had $8.1 billion in cash on hand. As per available information, the company has no debt maturing before the year of 2022.
The newly announced MGM Resorts’ senior notes are unsecured and are to be supported by the company’s domestic subsidiaries in the United States. The new senior notes carries the same payment rights as previously issues notes, as well as any future unsecured indebtedness invited by the company or its guarantors. Overall, the new increase in the number of senior notes will lead to further thinning of the value.
A number of companies, including BofA Securities Inc., J.P. Morgan Securities LLC, SMBC Nikko Securities America, Fifth Third Securities Inc., Scotia Capital (USA) Inc., Barclays Capital Inc., Citigroup Global Markets Inc., and BNP Paribas Securities Corp., are acting as co-managers for the offering.
Like any other casino company, MGM Resorts International is reeling under the impact of Covid-19 pandemic that forced all non-essential businesses, including casinos, to remain in the dark for several months. The gambling and entertainment properties of MGM, which is the largest casino operator on the Las Vegas Strip, suffered a steep decline in its market value during the pandemic as its stock slipped 35 per cent.
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