MGM China Reportedly Looking to Borrow $2B

MGM China, the China-facing division of gaming & hospitality giant MGM Resorts, is reportedly looking to borrow $2 billion to expand its properties in Macau and refinance its outstanding debt.

A Loan Makes Sense Considering MGM China’s Strong Position

According to a report by Bloomberg, people familiar with the matter reported that MGM China is negotiating a $2 billion loan with potential lenders. This money would help the company expand its MGM Macau and MGM Cotai properties in Macau and potentially refinance its outstanding debt. The company’s latest report, for context, outlined $3 billion in debt as of the end of 2024.

MGM China is currently gaining momentum as its shares continue to grow in the post-COVID period. Despite suffering significant blows due to the pandemic and China’s Zero-COVID policy, MGM China has since rebounded, reaching new heights.

In 2024, MGM China’s market share in the special administrative region reached a record 15.8%.

Considering the current business traction, a loan could make sense, allowing MGM China to further reinforce its position.

The Company Is Likely to Find a Suitable Creditor

Bloomberg’s sources elaborated that the company is looking for a $2 billion syndicated loan. The transaction would be in Hong Kong dollars, meaning that MGM China would secure HKD 15.55 billion under the current conversion rates.

Analysts believe that MGM China shouldn’t have significant difficulties in securing this loan, considering its strong financial position and cash reserves. The company’s latest report outlined strong revenues, EBITDA, $2.2 billion in cash and rapidly growing visitation, which are all qualities that creditor firms will be happy with.

However, Macau’s seemingly unstable market might prove to be a setback in MGM China’s efforts to procure the loan. While the significant COVID hurdles are largely behind the special administrative region, their lasting impact is still somewhat disconcerting to creditors.

The macroeconomic situation and the United States’ competition with China could be another difficulty on the way.

MGM Resorts Posted Stable 2024 Results

As mentioned, MGM Resorts recently posted its financials for 2024, highlighting strong results despite a slowdown in the fourth quarter of the year. The report showed that MGM China was a major contributor to a strong 2024 thanks to its stable post-COVID recovery.

The Macau-facing business saw its revenues increase from $3.2 billion to $4 billion, marking a 28% increase. Adjusted EBITDAR for the segment stood at $1.1 billion, up 25%.

In the company’s official release, MGM CEO Bill Hornbuckle said that the results were very encouraging.

Speaking of Hornbuckle, the MGM chief was just named as the national chair of the US Travel Association. In this position, Hornbuckle will be tasked with helping the board enact industry priorities and maximizing a “mega-decade” of upcoming events.