MGM Resorts collected $700mn thanks to the unit placement. The resort wrapped the unit placement with its real estate investment trust (REIT), MGM Growth Properties (MGP), and collected $700mn.
This was part of the existing agreement between the two parties. The agreement said that MGM could redeem $1.4bn worth of its stake in MGP and the company has already completed one $700mn transaction per agreement in May.
According to the reports, MGM plans to invest this money for general purposes. This time it would be for Christmas parties and bonuses for the companies, up to some extent. However, MGM CEO Bill Hornbuckle thinks that there are many other things ahead of them. He said that this money could be used for financial stability in the wake of COVID19 disruption. MGM has received some fines for violating health protocols and that can also be used there. It can also be used to purchase some properties, mostly one of the properties of Las Vegas Sands in Sin City.
The company now has a liquidity of $5.9bn and is one of the strongest companies in the industry. However, it has access to more in case required.
The casino operator now holds a 53% stake of the RETI, down from the 57.6% it held in last year May. This came after RETI completed the previously-agreed purchase of equity stake of MGP. If needed, it can always go back to MGP and pull some from 53%. The MGP holds almost all real estate properties under MGM name except Bellagio.
MGP has strengthened its position over the course and is seeking support from the investors. It has a pro-rata net leverage of 5.3x which is in line with the company’s projection between 5x to 5.5x.
Last Monday, it closed at $30.57 and last week hit $31.80 as the week progressed.
Inspirational Link: https://calvinayre.com/2020/12/03/casino/mgm-resorts-gets-a-december-bonus-as-it-completes-reit-sales-agreement/
