MGM Resort International announced Friday June 12, 2015 that it has refinanced the credit agreement for the Macau subsidiary. The agreement is being used to complete a $2.9 billion resort currently under construction on the Cotai Strip. According to MGM, the credit agreement has increased to $1.55 billion with an added $1.45 billion in revolving credit. The maturity date for the loan is now set for 2019.
MGM Resorts owns 51% of MGM China. The company stated the funds are going to be used to refinance the MGM Macau resort and for other corporate needs.
CEO Grant Bowie, of MGM, stated the $3 billion “will provide out company the financial flexibility to invest in MGM Macau and develop our second property.”
The MGM Cotai Resort is set to open in 2016. The project is one of three casino resorts currently being constructed by there. Las Vegas Sands Corp is constructing the $2.7 billion Parisian to include a half-scale replica of the Eiffel Tower. Wynn Resorts is creating the $4 billion Wynn Palace.
The Chinese gaming industry has suffered in the last year due to government changes to eliminate corruption involving high-end junket operators. The decrease in the Chinese economy created a 37% decline in gambling revenue over the last year.
Cameron McKnight, the Wells Fargo Securities gaming analyst, explained to investors on Friday that he feels Macau revenue will continue to decline in June hitting between 34 and 38 percent. It would make the 13th straight drop for monthly revenue.
Junket operators are taking the brunt of the revenue problems, and several operators closing or laying off more than 400 workers. Staff reductions, according to McKnight, are necessary and important due to the lack of growth. Banks are also taking a more cautious approach to extending credit to investors and casino operators.