MGM ‘profoundly’ strengthens balance sheet, sees investment grade near

By Devika Patel

Knoxville, Tenn., Feb. 16 – MGM Resorts International says it may be on the verge of an investment-grade credit rating after the company reduced leverage “dramatically” and continued to grow its free cash flow.

“We’ve come to that point that we’ve been hoping for, that we’ve been able to reduce our leverage dramatically through our free cash flow,” chairman and chief executive officer James J. Murren said on the company’s fourth quarter earnings conference call on Thursday.

“We have profoundly strengthened our balance sheet – I don’t know how many ratings upgrades we’ve had in the last few years - and we do believe that we’re on the cusp of becoming an investment-grade company.

“We see it now; it’s well within our reach,” Murren said.

“Our cash flow is continuing to grow,” chief financial officer, executive vice president and treasurer Daniel D’Arrigo said on the call.

“Our goal is to reduce debt with free cash flow, but I think we can continue to drive down leverage,” he added.

“We have taken significant steps over the past year to prudently pursue strategic opportunities while enhancing our capital structure, addressing near term maturities and strengthening the financial position of our company,” D’Arrigo said in a press release.

“We continue to focus on maximizing our cash flows to support our balanced approach to capital allocation including our quarterly dividend and targeted growth opportunities while remaining committed to returning MGM Resorts to investment grade.”

The company’s cash balance at Dec. 31, 2016 was $1.4 billion.

Cash flow was up 19% in the second half of 2016.

At Dec. 31, the company had $13.1 billion of debt outstanding, including $250 million outstanding under its $1.5 billion senior secured credit facility, $2.1 billion outstanding under the $2.7 billion operating partnership senior credit facility, $1.9 billion outstanding under the $3 billion MGM China credit facility and $450 million outstanding under the $525 million MGM National Harbor credit facility.

MGM Resorts is a Las Vegas-based operator of resorts and casinos.

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