MGM Resorts International Announces Closing of Offering of $750,000,000 Senior Notes due 2032

Rhea-AI Summary

MGM Resorts International completes $750 million senior notes offering to repay existing debt, providing financial flexibility for future investments.

Insights

Financial Analyst

MGM Resorts International's completion of a $750 million senior notes offering at a 6.500% interest rate, maturing in 2032, is a significant financial move. It's noteworthy that the company opted to issue these notes at par, which means they were sold at their face value. This could suggest confidence in the market's perception of MGM's creditworthiness, as notes issued at a discount could indicate investor skepticism regarding the issuer's ability to honor its debt obligations.

From a financial strategy perspective, using the proceeds to repay higher-interest debt maturing in 2025 is a prudent approach. It effectively reduces the interest burden and extends the maturity of the debt profile. This could improve MGM's interest coverage ratio and potentially its credit ratings. The impact on the stock market could be positive, as investors often view debt refinancing at lower interest rates as a sign of financial health and strategic management.

However, investors should also be aware of the leverage level post-transaction. If the company's leverage increases significantly, it could offset the benefits of lower interest payments with higher overall risk.

Debt Market Analyst

The issuance of 6.500% senior notes by MGM Resorts International is a tactical maneuver in the debt market. It's important to assess the yield compared to current market rates for similar maturities and credit ratings. If the yield is competitive, it suggests that MGM was able to secure financing without having to offer a premium, which is a positive signal for its creditworthiness.

Moreover, the fact that these notes are senior means they have priority over other debts in case of liquidation, which could make them more attractive to conservative investors. This could have a stabilizing effect on the company's stock as it reassures shareholders about MGM's risk management practices.

Investors should keep an eye on MGM's future earnings and cash flows to ensure that the company can comfortably meet its interest payments without compromising its operational capabilities or growth prospects.

Risk Management Consultant

The decision by MGM Resorts International to refinance its existing debt by issuing new senior notes is a classic example of proactive risk management. By locking in a lower interest rate for a longer period, the company is hedging against potential future interest rate hikes. Given the volatility in interest rates, this move could save the company millions in interest expenses over the life of the notes.

For stakeholders, this is a double-edged sword. On one hand, it indicates that management is taking steps to ensure long-term financial stability. On the other hand, the new debt issuance increases the company's total debt load, which could be a concern if the company's revenue streams are not robust enough to handle the additional debt service requirements.

It is also essential to monitor the use of short-term investments for the net proceeds. While these are typically low-risk, they must be managed to ensure liquidity needs are met without sacrificing potential returns.

LAS VEGAS, April 9, 2024 /PRNewswire/ -- MGM Resorts International (the "Company") (NYSE: MGM) today announced that it has completed its previously announced issuance (the "Offering") of $750,000,000 in aggregate principal amount of 6.500% senior notes due 2032 (the "Notes"), which were issued at par.

The Company intends to use the net proceeds from the offering of the notes to repay existing indebtedness, including its outstanding 6.750% senior notes due 2025. Pending such use, the Company may invest the net proceeds in short-term interest-bearing accounts, securities or similar investments.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is an S&P 500® global gaming and entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 31 unique hotel and gaming destinations globally, including some of the most recognizable resort brands in the industry. The Company's 50/50 venture, BetMGM, LLC, offers sports betting and online gaming in North America through market-leading brands, including BetMGM and partypoker, and the Company's subsidiary, LV Lion Holding Limited, offers sports betting and online gaming through market-leading brands in several jurisdictions throughout Europe. The Company is currently pursuing targeted expansion in Asia through the integrated resort opportunity in Japan. Through its "Focused on What Matters: Embracing Humanity and Protecting the Planet" philosophy, MGM Resorts commits to creating a more sustainable future, while striving to make a bigger difference in the lives of its employees, guests, and in the communities where it operates. The global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine's World's Most Admired Companies®. For more information, please visit us at www.mgmresorts.com. Please also connect with us @MGMResortsIntl on Twitter as well as Facebook and Instagram.

Forward Looking Statements

Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and/or uncertainties, including those described in the Company's public filings with the SEC. The Company has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to: our ability to reduce expenses and otherwise maintain our liquidity position; the Company's ability to generate significant cash flow and execute on its strategic initiatives, including the development of an integrated resort in Japan and investments we make in sports betting and iGaming; amounts we will spend in capital expenditures and investments; our expectations with respect to future share repurchases; and the impact of cybersecurity incidents, including the Company's September 2023 cybersecurity issue. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include: the effects of economic conditions and market conditions in the markets in which the Company operates and competition with other online gaming and sports betting operators and destination travel locations throughout the United States and the world; the design, timing and costs of expansion projects; risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions; and additional risks and uncertainties described in the Company's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

MGM RESORTS CONTACTS:

Investment Community:
SARAH ROGERS, Senior Vice President of Corporate Finance
(702) 730-3942, srogers@mgmresorts.com

ANDREW CHAPMAN, Director of Investor Relations
(702) 693-8711, achapman@mgrmesorts.com

News Media:
BRIAN AHERN, Executive Director of Communications
media@mgmresorts.com 

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SOURCE MGM Resorts International

FAQ

What is the purpose of MGM Resorts International's $750 million senior notes offering?

The purpose of the offering is to repay existing indebtedness, including outstanding 6.750% senior notes due 2025.

What is the interest rate on the senior notes issued by MGM Resorts International?

The senior notes carry an interest rate of 6.500% and are due in 2032.

How much was the aggregate principal amount of the senior notes issued by MGM Resorts International?

MGM Resorts International issued $750,000,000 in aggregate principal amount of senior notes.

What will MGM Resorts International do with the net proceeds from the senior notes offering?

The company plans to use the net proceeds to repay existing debt, with the option to invest in short-term interest-bearing accounts, securities, or similar investments.