MGM Resorts to provide MGM China subsidiary with $750m loan

MGM China has announced a loan agreement has been entered into with its parent, MGM Resorts, for an amount of up to $750m.  

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Agreed on 10 November, the loan will last for two years, by which point MGM China must pay its parent company back at an interest rate greater than 4% per annum.  

MGM Resorts will provide its subsidiary with the loan for “financial assistance,” as the company’s Macau-based properties struggle in what continues to be a poor economic environment.  

However, MGM China says this revolving loan facility “highlights the company’s confidence in the long-term growth potential of Macau.” 

Its statement continued: “The availability of the facility further bolsters the company's already strong financial position in meeting future working capital and other funding needs.” 

With MGM Resorts continuing to fund its subsidiary, should Macau keep stuttering under persistent Covid-19 restrictions, its losses will only grow. 

Last week, MGM China reported revenue for Q3 2022 at HK$687m ($87.5m), down 45% sequentially. It also posted negative adjusted EBITDA of HK$536m for Q3, worse than Q2’s negative adjusted EBITDA of HK$382m. 

This situation is made worse by the fact that a key Chinese holiday – Golden Week – occurs in Q3 (October), a time which usually sees Macau’s tourism figures and footfall in its casinos rise. 

Despite these poor results, and the subsequent loan MGM China has received, the company said it remains in a healthy fiscal position with HK$9.9bn of liquidity still behind the business.

Commentators are mixed on their interpretations of Macau's recovery prospects, although some firmly believe the region will regain its pre-pandemic strength, with MGM Resorts clearly being one. 

For more on what the future may hold in store for Macau, click here. 

Like Macau’s other current concessionaires, MGM China will see its gaming licence renewed when the new concession period begins on 1 January 2023.  

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