LAS VEGAS, May 31, 2016 /PRNewswire/ -- MGM Resorts
International (NYSE: MGM) and MGM Growth Properties LLC (NYSE: MGP)
today announced that MGM Resorts has entered into a definitive
agreement to acquire Boyd Gaming Corporation's ("Boyd Gaming")
(NYSE:BYD) 50 percent interest in Borgata Hotel Casino & Spa
("Borgata") in Atlantic City, New
Jersey for consideration of $900
million. Further, MGM Resorts and MGP have entered into a
definitive agreement whereby, following the completion of the
acquisition of Boyd Gaming's interest, MGP will acquire 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 (together, the "Transactions").
MGM Resorts will pay approximately $600
million for Boyd Gaming's 50 percent 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 $812 million in net revenues and $212 million in Adjusted EBITDA.
"Borgata is the premier resort in Atlantic City and a great addition to our
growing presence in the Northeast," said Jim Murren, Chairman and CEO of MGM Resorts
International. "While the market continues to experience
challenges, Borgata has outperformed and differentiated itself as
the undisputed leader in the city. Our decade-long partnership with
Boyd Gaming has been a great one, and Borgata's talented employee
base will complement and strengthen our more than 60,000-member
worldwide MGM Resorts team. We are excited about the opportunity to
bring our market-leading loyalty program, M life Rewards, to the
resort and integrate our operations, to position Borgata for
further growth."
Subsequent to the purchase of Boyd Gaming's 50 percent 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 $1.175 billion.
"We are excited to add Borgata to the MGP portfolio, further
diversifying our geographic presence. With this transaction, we are
executing on our core growth strategy in prudently building a
portfolio of high-quality assets with market leading competitive
positions," said James Stewart, CEO
of MGM Growth Properties. "We expect the transaction to result in
high single digit percentage accretion to AFFO per share, and pro
forma net leverage will remain similar to our current levels."
MGP expects to fund the acquisition of the Borgata real property
and the assumption of related debt with a combination of existing
cash on hand, borrowings under its senior secured revolving credit
facility, and the issuance of operating partnership units to a
subsidiary of MGM Resorts, based upon MGP's closing price of
$23.03 as of May 27, 2016.
Borgata will be added to the existing Master Lease between MGM
Resorts and MGP, and the initial rent payment to MGP will increase
by $100 million. Consistent with the
Master Lease terms, 90 percent of this rent will be fixed and
contractually grow at 2 percent per year until 2022.
"The Transactions provide numerous benefits to MGM Resorts and
creates significant value for our shareholders," said Dan D'Arrigo,
Executive Vice President and CFO of MGM Resorts International. "We
expect MGM Resorts to remain net leverage-neutral, as we fully
consolidate Borgata's cash flows into the MGM Resorts portfolio.
Looking ahead, we believe the impact of the Transactions remain
consistent with our focus on further deleveraging the balance
sheet."
Concluded Mr. Murren, "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."
The conflicts committee of the MGP Board of Directors engaged
PJT Partners as its financial advisor to give an opinion on the
fairness from a financial point of view to MGP of the total
consideration paid in the transaction by MGP.
The Transactions are expected to close in the third quarter of
2016, subject to regulatory approvals and other customary closing
conditions.
About MGM Resorts International
MGM Resorts International (NYSE: MGM) is one of the world's
leading global hospitality companies, operating a portfolio of
destination resort brands including Bellagio, MGM Grand, Mandalay
Bay and The Mirage. The Company is in the process of developing MGM
National Harbor in Maryland and
MGM Springfield in Massachusetts.
MGM Resorts controls, and holds a 73 percent economic interest in
the operating partnership of MGM Growth Properties LLC (NYSE: MGP),
a premier triple-net lease real estate investment trust engaged in
the acquisition, ownership and leasing of large-scale destination
entertainment and leisure resorts. The Company also owns 51 percent
of MGM China Holdings Limited (HK: 2282), which owns the MGM Macau
resort and casino and is developing a gaming resort in Cotai, and
50 percent of CityCenter in Las
Vegas, which features ARIA Resort & Casino. MGM Resorts
is named among FORTUNE® Magazine's 2016 list of World's
Most Admired Companies®. For more information about MGM
Resorts International, visit the Company's website at
www.mgmresorts.com.
About MGM Growth Properties LLC
MGM Growth Properties LLC (NYSE:MGP) is one of the leading
publicly traded real estate investment trusts engaged in the
acquisition, ownership and leasing of large-scale destination
entertainment and leisure resorts, whose diverse amenities include
casino gaming, hotel, convention, dining, entertainment and retail
offerings. In connection with its initial public offering, MGP
acquired from MGM Resorts nine premier destination resorts in
Las Vegas and elsewhere across
the United States and one dining
and entertainment complex which opened in April 2016. As of December
31, 2015, these properties collectively comprise 24,466
hotel rooms, approximately 2.5 million convention square footage,
over 100 retail outlets, over 200 food and beverage outlets and
approximately 20 entertainment venues. As a growth-oriented public
real estate entity, MGP expects its relationship with MGM Resorts
to attractively position MGP for the acquisition of additional
properties across the entertainment, hospitality and leisure
industries that MGM Resorts may develop in the future.
Statements in this release that are not historical facts are
"forward-looking" statements and "safe harbor statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and/or uncertainties, including those described
in each of MGM Resorts' and MGP's public filings with the
Securities and Exchange Commission. Management of MGM Resorts and
MGP have based forward-looking statements on their current
expectations and assumptions and not on historical facts. Examples
of these statements include, but are not limited to, the closing of
the Transactions and any expected benefits to be realized as a
result of the Transactions (including any expected accretion to
AFFO per share). These forward-looking statements involve a number
of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated in
such forward-looking statements include effects of economic
conditions and market conditions in the markets in which the
companies operate and competition with other destination travel
locations throughout the United
States and the world, the design, timing and costs of
expansion projects, risks relating to international operations,
permits, licenses, financings, approvals and other contingencies in
connection with growth in new or existing jurisdictions, delays or
impediments to completing planned acquisitions or projects, the
ultimate timing and outcome of any planned acquisitions or
projects, MGP's ability to maintain its status as a REIT and
additional risks and uncertainties described in each of MGM
Resorts' and MGP's periodic reports filed with the Securities and
Exchange Commission (including all amendments to those reports). In
providing forward-looking statements, neither company is
undertaking any duty or obligation to update these statements
publicly as a result of new information, future events or
otherwise, except as required by law. If either company updates one
or more forward-looking statements, no inference should be drawn
that it will make additional updates with respect to those other
forward-looking statements.
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SOURCE MGM Resorts International; MGM Growth Properties LLC