Credit will provide “financial flexibility”
MGM Resorts International, which owns 51 percent of its MGM China subsidiary in Macau, has refinanced a credit agreement that will help the company complete its $2.9 billion resort on the Cotai Strip in Macau. According to the Las Vegas Review-Journal, the credit line has been increased to $1.55 billion, and the company also arranged a $1.45 billion revolving line of credit that will reach maturity in 2019.
MGM China CEO Grant Bowie said the agreement “will provide our company the financial flexibility to invest in MGM Macau and develop our second property,” MGM Cotai, which is expected to open in 2016.
Nevada gaming companies are building a total of three megaresorts in Cotai. The Las Vegas Sands Corp. is building the $2.7 billion Parisian, and Wynn Resorts Ltd. is building the $4 billion Wynn Palace.
Analysts are concerned about new supply in Macau, which just posted its 12th straight month of revenue declines. Last year at this time, the Chinese government under President Xi Jinping cracked down on graft and corruption in Macau’s gaming industry—a campaign that scared off high-rolling VIPs and led to a 37 percent overall drop in the market.
Wells Fargo Securities gaming analyst Cameron McKnight says there’s more to come. He told investors that he expects Macau gaming revenue to decline between 34 percent and 38 percent in June, for an unlucky 13th month.
“In our view, potential staffing reductions reflect the current reality of the VIP business,” McKnight said. “In addition, the report noted that certain banks have been taking a more cautious stance in extending credit.”
Two leading junket operators have denied reports they are firing 300 workers. Representatives of the David Group and Neptune Guangdong Group told the Macau Business Daily that the reports are only “rumors.”
