MGM Resorts International Prices $850,000,000 in Senior Notes

Rhea-AI Summary

MGM Resorts International (NYSE: MGM) has priced a public offering of $850 million in 6.125% senior notes due 2029, upsized from the originally announced $675 million. The offering is expected to close on September 17, 2024. The company plans to use the net proceeds to repay existing debt, including its 5.750% senior notes due 2025, pay transaction-related fees, and for general corporate purposes. The notes will be general unsecured senior obligations, guaranteed by most of MGM's wholly owned domestic subsidiaries. Multiple financial institutions will act as joint book-running managers and co-managers for the offering. This offering is made under a prospectus supplement and accompanying prospectus filed with the SEC.

Positive

• Successful upsizing of the bond offering from $675 million to $850 million, indicating strong investor demand
• Refinancing of existing debt with new notes at a competitive interest rate of 6.125%
• Potential improvement in debt structure and maturity profile by replacing 2025 notes with 2029 notes

Negative

• Increase in total debt load by $175 million from the upsized offering
• Higher interest rate of 6.125% on new notes compared to 5.750% on the notes being repaid, potentially increasing interest expenses

Insights

Financial Analyst

MGM Resorts' $850 million senior notes offering at 6.125% interest rate signals a strategic move to refinance debt and bolster liquidity. The upsizing from $675 million to $850 million suggests strong investor demand, potentially indicating market confidence in MGM's financial outlook. The primary use to repay 5.750% notes due 2025 is a prudent step to manage near-term debt maturities and potentially reduce interest expenses. However, the higher interest rate on the new notes (6.125% vs 5.750%) reflects the current higher interest rate environment, which could impact future profitability. The diverse syndicate of underwriters, including major financial institutions, adds credibility to the offering. Overall, this refinancing enhances MGM's financial flexibility but comes at a higher cost of capital.

Gaming Industry Expert

MGM's debt offering underscores the resilience of the gaming sector post-pandemic. The company's ability to secure $850 million in financing reflects investor confidence in its diversified portfolio of 31 properties and its expansion into online gaming through BetMGM. The mention of targeted expansion in Asia, particularly the integrated resort opportunity in Japan, hints at MGM's growth strategy in high-potential markets. This could be a game-changer for MGM's international presence. The company's focus on sustainability and community impact, as highlighted in its "Focused on What Matters" philosophy, aligns with growing ESG concerns among investors. However, the higher interest rate on the new notes may pressure margins in an industry already facing inflationary challenges and potential economic headwinds.

Market Research Analyst

MGM's successful upsizing of its notes offering from $675 million to $850 million indicates robust demand from institutional investors, potentially signaling positive sentiment towards the hospitality and gaming sectors. The company's diverse portfolio, spanning 31 destinations globally, provides a hedge against regional economic fluctuations. The 50/50 venture in BetMGM positions the company well in the rapidly growing online gaming and sports betting markets in North America and Europe. This diversification strategy could be a key driver for future growth. However, the higher interest rate environment, as reflected in the 6.125% coupon, may impact the company's cost structure. Investors should monitor how effectively MGM balances its expansion plans, particularly in Asia, with managing its debt load in this higher interest rate climate.

LAS VEGAS, Sept. 3, 2024 /PRNewswire/ -- MGM Resorts International (the "Company") (NYSE: MGM) today announced that it has priced a public offering of $850,000,000 in aggregate principal amount of 6.125% senior notes due 2029 at par. The offering of notes was upsized from the originally announced aggregate principal amount of $675,000,000. The transaction is expected to close on September 17, 2024, subject to customary closing conditions.

The Company intends to use the net proceeds from the offering of the notes to (i) repay indebtedness, including its outstanding 5.750% senior notes due 2025, and (ii) pay transaction-related fees and expenses, with the remainder for general corporate purposes. Pending such use, the Company may invest the net proceeds in short-term interest-bearing accounts, securities or similar investments.

The notes being offered will be general unsecured senior obligations of the Company, guaranteed by substantially all of the Company's wholly owned domestic subsidiaries that guarantee the Company's other senior indebtedness, and equal in right of payment with all existing or future senior unsecured indebtedness of the Company and each guarantor.

BofA Securities, Inc., J.P. Morgan Securities LLC, Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Citizens JMP Securities, LLC, Deutsche Bank Securities Inc., Fifth Third Securities, Inc., Morgan Stanley & Co. LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc. and Truist Securities, Inc. will act as joint book-running managers and Goldman Sachs & Co. LLC, PNC Capital Markets LLC, U.S. Bancorp Investments, Inc., Wells Fargo Securities, LLC, CBRE Capital Advisors, Inc. and Valtus Capital Group, LLC will act as co-managers for the proposed offering.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction. This press release shall not constitute a notice of redemption with respect to the 5.750% senior notes due 2025. Any such notice of redemption will be delivered in accordance with the indenture governing the 5.750% senior notes due 2025.

The offering of the notes will be made under a prospectus supplement related to the notes and an accompanying prospectus filed as part of the Company's existing effective shelf registration statement on file with the Securities and Exchange Commission ("SEC"). The Company will file a final prospectus supplement with the SEC for the notes offering to which this communication relates. Alternatively, the Company, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and the final prospectus supplement if you request it from BofA Securities, Inc., NC1-004-03-43, 200 North College Street, 3rd floor, Charlotte NC  28255-0001, Attn: Prospectus Department, Email: dg.prospectus_requests@bofa.com.

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®.

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: completion of the senior notes offering; the Company's expectations regarding any benefits expected to be received from the Company's recent transactions, including the transactions with Push Gaming, Tipico, Playtech and the long-term license agreement with Marriott International; future results of the Company (including the Company's ability to maintain a strong balance sheet), and its unconsolidated affiliates, including BetMGM; expectations regarding the impact of macroeconomic trends on the Company's business; expectations regarding the Company's booking pace, liquidity position and the size and timing of future investments, including capital investments in the Company's properties; the Company's ability to execute on its strategic plans, including the development of an integrated resort in Japan, expansion of LeoVegas and the BetMGM brand in regulated markets, including Latin America, development of proprietary iGaming content and live casino content, and positioning BetMGM as a leader in sports betting and iGaming (including expectations regarding BetMGM's projected market share and profitability); expectations regarding the performance of MGM China and continued payment of the MGM China dividend; and the Company's ability to return capital to shareholders (including the timing and amount of any share repurchases).

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@mgmresorts.com

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

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SOURCE MGM Resorts International

FAQ

What is the size and interest rate of MGM Resorts' new senior notes offering?

MGM Resorts International (NYSE: MGM) has priced a public offering of $850 million in 6.125% senior notes due 2029.

When is the closing date for MGM's $850 million senior notes offering?

The offering is expected to close on September 17, 2024, subject to customary closing conditions.

How does MGM plan to use the proceeds from the $850 million senior notes?

MGM intends to use the net proceeds to repay existing debt, including its 5.750% senior notes due 2025, pay transaction-related fees, and for general corporate purposes.

Which financial institutions are managing MGM's $850 million senior notes offering?

BofA Securities, J.P. Morgan Securities, Barclays Capital, and several other institutions are acting as joint book-running managers, with additional firms serving as co-managers for the offering.