Monday, October 25, 2010

MGM Resorts Sells $500M Notes; Investor Protections Questioned

NEW YORK (Dow Jones) -- Casino operator MGM Resorts International (MGM) late Monday afternoon sold $500 million of senior unsecured 6-year notes as part of an ongoing effort to refinance existing debt.

The 10% notes due November 1, 2016 sold at a discounted face value of 98.897 cents on the dollar to yield 10.25 percent via underwriters Bank of America Merrill Lynch, Barclays, BNP and RBS, according to a person familiar with the deal, in line with earlier price guidance.

Standard & Poor's on Monday rated the notes CCC+ while Fitch Ratings rated them CCC, both deep in speculative-grade, or junk, territory. Proceeds from the offering will repay part of the $1.2 billion of MGM's senior credit facility still due to mature in October 2011. In February, lenders representing $4.37 billion of the $5.55 billion senior bank credit facility agreed to extend the maturity of their portion to 2014 from 2011.

Some analysts assailed the new note offering for what they said was a lack of investor protections, known as covenants, that are commonly found in other speculative-grade bond offerings.

1 comment:

  1. It is always scary if the management decides to to put your investment into something very speculative. They still get their salaries and big bonuses even if these investments turned out to be bad.

    pattaya holiday packages