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MGM Resorts to Provide Revolving Loan of $750 Million to Chinese Unit Competing for New Casino License in Macau

Several days ago, MGM China revealed that its parent company – MGM Resorts International – is set to provide it with a subordinated revolving loan facility worth up to $750 million. Currently, MGM China Holdings Ltd operates two casino properties on the territory of the special administrative region of Macau – MGM Cotai and MGM Macau.

In a filing sent to the Hong Kong Stock Exchange, the Chinese division of the US casino and gambling giant revealed that the financial assistance agreement with its parent company highlights the company’s confidence in the long-term growth potential of the Macau gambling sector. Company officials noted that the availability of the facility further enhanced the company’s already stable financial position when it comes to meeting various objectives.

According to the information unveiled by the company, the revolving loan facility’s term is 24 months, with the interest rate planned to be greater than 4% annually and the prevailing market rate.

Earlier in November, the Macau casino company revealed that it has faced an increase in its quarterly loss when it comes to adjusted property EBITDA (earnings before interest, tax, depreciation and amortization) for the three months to September 30th.

For the time being, MGM Resorts controls a 56% stake in MGM China Holdings.

MGM Chinese Subsidiary Suffers Negative Impact of Macau Covid-19 Restrictions

With the parent casino operator MGM Resorts still funding its Chinese subsidiary, should Macau keep suffering the negative impact of Covid-19 limitations, its losses are only expected to increase.

Only a week ago, MGM China reported a 45% drop in its third-quarter revenue to HK$687 million. As mentioned above, the operator also posted a negative adjusted EBITDA of HK$536 million, which is worse than the already low adjusted EBITDA of HK$382 million. The results are made even worse by the fact that one of the major Chinese holidays – Golden Week – takes place in the third quarter and is usually a time when the tourism figures and casino gambling rates in Macau increase.

Although the company’s financial results in the third quarter were poor, as well as the subsequent loan received by MGM China, the Macau division of the operator noted that it remains in a healthy fiscal position, with liquidity estimated at HK$9.9 billion.

Incumbent MGM China is one of the seven competitors in the currently ongoing public tender for six new 10-year casino licensees in Macau. Now, the firm is competing with the bids made by the other five incumbent operators and GMM Ltd – a local company associated with Genting Malaysia Bhd.

As CasinoGamesPro previously reported, the Macau Government has announced hopes to start the new casino license term on January 1st, 2023.

In October 2023, Investment bank Credit Suisse AG revealed in a note that the new Macau casino license holders might have to spend between HK$10 billion and HK$20 billion each on non-gambling services and activities they will have to agree to offer during the 10-year term of the permits.

 Author: Harrison Young

Harrison Young is an experienced writer, who started his career almost 8 years ago. Prior to joining our team at CasinoGamesPro, he worked as an editor for a small magazine.