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MGM offering $750M in senior notes to boost cash on hand

Updated October 8, 2020 - 2:06 pm

MGM Resorts International is making another go at boosting its cash on hand.

The Las Vegas-based casino operator is offering $750 million worth of senior notes due 2028, according to a Thursday filing with the U.S. Securities and Exchange Commission. The offer comes as the COVID-19 pandemic continues to have “a significant impact on (MGM’s) business, results of operations and financial condition.”

This isn’t the company’s first bond offer since the onset of the coronavirus pandemic. In late April, the casino operator issued another $750 million public offering of senior notes to improve its liquidity.

“During this time, we have remained committed to managing our expenses to maintain our robust liquidity position,” the casino operator said in Thursday’s filing.

As of Sept. 30, MGM Resorts has reopened all of its properties. But many still have limited amenities and occupancy rates. The company said it is not yet sure how long it will take for its properties’ operations to return to normal, or if any properties will be required to temporarily close once again.

As of Aug. 31, the company had roughly $3.6 billion in cash, according to the filing. That does not include cash and cash equivalents invested with its affiliated real estate investment trust, MGM Growth Properties — in which MGM has a 56.7 percent economic interest — or at MGM China.

The company has made other moves to secure cash in recent months, including an agreement with MGM Growth to receive cash in exchange for up to $1.4 billion of the company’s existing operating partnership units. MGM has cashed in on $700 million so far and has the option to receive an additional $700 million in cash.

All of this should help the company continue to weather blows from the pandemic.

When MGM’s properties were closed in the second quarter, the company estimated that its cash spending — including corporate and operating expenditures, net rent, interest and capital expenditures — would be roughly $270 million per month.

The actual cash outflow in April and May ended up slightly lower than expected, and the company was able to reduce spending as its properties began reopening to the public. Much of the reduced spending came from cutting back amenities and its workforce. In August, the company laid off 18,000 workers. The company said in the SEC filing the “aggressive” cost-cutting measures could negatively affect guest loyalty and the company’s ability to attract and retain employees.

MGM upsized its offering from $500 million.

MGM shares, traded on the New York Stock Exchange, closed up 2 percent Thursday to $21.93 per share.

Contact Bailey Schulz at bschulz@reviewjournal.com. Follow @bailey_schulz on Twitter.

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