MGM restructures $950 million in Macau loans

MGM Resorts International on Monday restructured some $950 million in loans to its MGM Grand Macau resort, which could be a prelude to the company's planned initial public offering on the Hong Kong Stock Exchange.

A statement released by MGM Resorts and Hong Kong businesswoman Pansy Ho, 50-50 partners in the Chinese venture, said the refinanced loan structure should give the hotel-casino additional liquidity.

The 600-room MGM Grand Macau opened in December 2007 at a cost of $1.25 billion.

MGM Resorts officials had said the company would follow in the footsteps of Wynn Resorts Ltd. and Las Vegas Sands Corp. Last year, the companies listed shares of its Macau gaming holdings on the Hong Kong Stock Exchange.

Wynn raised $1.63 billion through its IPO, while Las Vegas Sands raised $2.5 billion. It's estimated MGM Resorts could raise at least $500 million.

"We think the completion of this (refinance) has been a gating factor for the joint venture before it moves forward with its IPO, which suggests they could be ready to move ahead with the offering within the next few months," Union Gaming Group principal Bill Lerner told investors.

The announcement by MGM Resorts came on the same day as a report showed Macau gaming revenues in July increasing more than 70 percent over 2009 and almost 20 percent from June.

"We have made significant progress in building our revenues at MGM Grand Macau," MGM Resorts Chairman and CEO Jim Murren said in a statement. "(That) has resulted in a positive impact on our cash flows. We view the significant investor demand on this transaction as validation of our progress."

Gaming analysts pounced on the Macau results as a sign of strength for Wynn Resorts, Las Vegas Sands and MGM Resorts, which are the only American-based casino operators licensed in Macau. MGM Resorts reports second-quarter earnings to day.

"We believe these results are better than expected and confirms our belief that Macau gaming revenues will continue to be strong throughout 2010, despite a modest cooling of the Chinese economy," Jefferies and Co. gaming analyst David Katz told investors. "We note, however that comparisons become more challenging in September and more so in October, which began the trend of strong growth."

JP Morgan gaming analyst Joe Greff said the July figure of more than $2 billion in U.S. dollars was the second-highest monthly gaming revenue total ever for the region, exceeded only by May's $2.13 billion.

"This is modestly ahead of buy-side investor expectations, in our view, and pretty impressive growth overall, considering that the comparison to last year was less easy than in prior months," Greff told investors.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.