MGM China Holdings Ltd to Gain Financial and Investment Benefits From Macau Contract Extension

The Macau government’s decision to renew and extend the casino license for MGM China Holdings for another two years, until June 2022, could bring numerous benefits for the gargantuan operator.

The Hong King-listed company’s CEO, Grant Bowie, reckons that this extension will help the operator “improve business financing and prepare for capital investments.”

Multiple Different Scenarios

The announcement of this sub-concession extension was announced last Friday by the former Portuguese enclave’s authorities.

Speaking to GGRAsia, Bowie stated that casino rights extension if positive for MGM China because it gives the company an opportunity to look at other strategies regarding financing and to prepare the firm for future capital investments.

“This decision strengthens our capacity to finance the business. We have a whole series of different scenarios we are now working through.”

Debt Problems

MGM China, which is a subsidiary of parent company, MGM Resorts International, listed in Las Vegas, has $2.4 billion in outstanding debt according to Nasdaq annual reported filed in on February 27th.

In December, arrangements have been made that allowed the group to borrow more money that would be used to refinance other debts and fund new transactions.

MGM Resorts is currently looking to secure one of the casino licenses in Japan, a market that is due to open for international operators in few years’ time.

Two Towers

Although it hasn’t been publicly specified, it is no longer even a corporate secret that MGM China plots a construction of another tower at MGM Cotai which is its second Macau resort. The first one, worth $3.4 billion, was launched in February 2018.

Comments Bowie: “The tower is certainly one of the things we built in [to our planning]… but we actually have a lot of other opportunities that we want to create for the business as well. The issue of capacity and financial structuring are kind of separate conversations.”

He concluded by saying that the firm is pleased that this hurdle has been cleared and that all six Macau operators are all now aligned. “The government can hopefully start putting together the structures and processes they are looking for at 2022.”

The Perks of Being Independent

GGRAsia interviewers touched upon the subject of whether the company aims to become its own concessionaire after 2022’s license expiry, instead of being a sub-concessionaire of SJM…

…to which Bowie responded that it would clearly be an advantage and a fortunate development of circumstances, but it will have to boil down to the government’s decision on how to move forward with the whole process.

Source:

“Concession extension aids MGM China financing: CEO”, ggrasia.com, March 19, 2019.