MGM to fund purchase with revolver; Boyd to repay debt with proceeds

By Angela McDaniels

Tacoma, Wash., May 31 – MGM Growth Properties LLC plans to use borrowings under its senior secured revolving credit facility to help fund MGM Resorts International’s acquisition of Boyd Gaming Corp.'s 50% interest in Borgata Hotel Casino & Spa in Atlantic City, according to an MGM news release.

MGM Growth will also fund the acquisition with cash on hand and the issuance of operating partnership units to a subsidiary of MGM Resorts.

The price is $900 million and a 50% share of any future property tax settlement benefits received by Borgata.

MGM Resorts will pay about $600 million of cash, subject to customary working capital adjustments, after consideration of Borgata's roughly $600 million of outstanding debt, which MGM Resorts will assume and refinance.

Boyd Gaming plans to use the proceeds it receives from the transaction to reduce debt as part of its goal to reach a leverage target of 4 times to 5 times.

Subsequent to the purchase, MGM Resorts will sell all of Borgata’s real property to MGM Growth for total consideration of about $1.18 billion.

MGM Growth expects pro forma net leverage to remain similar to its current levels.

The transactions are expected to close in the third quarter.

MGM Resorts is a collection of resort-casinos, residential living and retail developments. MGM Growth is a real estate investment trust. Boyd is a gaming and entertainment company. Each is based in Las Vegas.

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