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US – MGM to buy remaining shareholding in Borgata for $900m

MGM Resorts is buying the rest of Boyd Gaming’s 50 per cent interest in Borgata Hotel Casino & Spa in Atlantic City, New Jersey for consideration of $900m.

Further, MGM Resorts will buy Borgata’s real property from MGM Resorts and lease back the real property to a subsidiary of MGM Resorts, after which a subsidiary of MGM Resorts will operate Borgata.

It will pay $600mfor Boyd Gaming’s 50 per cent interest, subject to customary working capital adjustments, after consideration of Borgata’s outstanding debt of approximately $600 million, which MGM Resorts will assume and refinance. For the last twelve months ended March 31, 2016, Borgata reported $812m in net revenues and $212m in Adjusted EBITDA.

"Borgata je vrhunsko letovišče v Atlantic Cityju in odličen dodatek naši vse večji prisotnosti na severovzhodu," je povedal Jim Murren, predsednik in izvršni direktor MGM Resorts International. »Medtem ko se trg še naprej sooča z izzivi, je Borgata presegla in se izkazala kot nesporni vodja v mestu. Naše desetletje dolgo partnerstvo z Boyd Gaming je bilo odlično in Borgatina nadarjena baza zaposlenih bo dopolnila in okrepila našo več kot 60,000-člansko ekipo MGM Resorts po vsem svetu. Navdušeni smo nad priložnostjo, da naš vodilni program zvestobe na trgu, M life Rewards, prenesemo v letovišče in integriramo naše operacije, da Borgata postavimo za nadaljnjo rast.«

Subsequent to the purchase of Boyd Gaming’s 50 per cent stake in Borgata, MGM Resorts and MGP have agreed that MGM Resorts will sell all of Borgata’s real property to MGP for total consideration of approximately $1.175bn.

»Navdušeni smo, da dodamo Borgato v portfelj MGP, s čimer bomo dodatno razširili našo geografsko prisotnost. S to transakcijo izvajamo našo osrednjo strategijo rasti pri preudarni izgradnji portfelja visokokakovostnih sredstev z vodilnimi konkurenčnimi položaji na trgu,« je dejal James Stewart, izvršni direktor MGM Growth Properties. "Pričakujemo, da bo transakcija povzročila visoko enomestno odstotno povečanje AFFO na delnico, pro forma neto finančni vzvod pa bo ostal podoben našim trenutnim ravnem."

Borgata will be added to the existing Master Lease between MGM Resorts and MGM Growth Properties Resorts, and the initial rent payment to MGP will increase by $100m. Consistent with the Master Lease terms, 90 percent of this rent will be fixed and contractually grow at two per cent per year until 2022.

"Transakcije zagotavljajo številne ugodnosti za MGM Resorts in ustvarjajo pomembno vrednost za naše delničarje," je dejal Dan D'Arrigo, izvršni podpredsednik in finančni direktor MGM Resorts International. »Pričakujemo, da bo MGM Resorts ostal nevtralen glede neto finančnega vzvoda, saj v celoti konsolidiramo denarne tokove Borgate v portfelj MGM Resorts. Če pogledamo naprej, verjamemo, da učinek transakcij ostaja skladen z našo osredotočenostjo na nadaljnje razdolževanje bilance stanja.«

Mr. Murren added: “We are pleased to demonstrate the ability for MGM Resorts and MGM Growth Properties to transact on an accretive basis to both parties and look forward to continue working collaboratively in the future.”

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: “The development and opening of Borgata in 2003 was an important step in the evolution and growth of Boyd Gaming. Under our leadership, Borgata firmly established itself as the East Coast’s most popular and successful entertainment resort throughout the last 13 years. While we are pleased with the performance of this property, this transaction is an attractive opportunity to immediately unlock significant value for our shareholders. We intend to use the proceeds to reduce debt, further strengthening our balance sheet and accelerating the timeline for reaching our leverage target of four to five times debt to Adjusted EBITDA.”

Mr. Smith added: “The consistent success of Borgata is a tribute to the entire Borgata team, as they have continued to outperform an evolving and challenging Atlantic City market. We thank them for their tremendous contributions to Borgata and Boyd Gaming, and we wish them continued success as they join the MGM team.”