MGM Credit Agreement: Everything You Need to Know
MGM Resorts International, one of the largest resort and casino companies in the world, has recently announced the signing of a new credit agreement with a consortium of leading financial institutions. The credit agreement, which is valued at $1.5 billion, will provide the company with additional liquidity and financial flexibility as it navigates through the COVID-19 crisis.
Here`s everything you need to know about the MGM credit agreement.
What is a Credit Agreement?
A credit agreement is a legal document that sets out the terms and conditions of a loan or credit facility. It outlines the amount of the loan, interest rate, repayment schedule, and other key terms of the credit arrangement.
In the case of MGM Resorts, the company has secured a new $1.5 billion credit agreement with a group of financial institutions led by JPMorgan Chase. The new credit agreement replaces an existing one, which was set to expire in 2023.
Why Did MGM Need the Credit Agreement?
Like many companies in the travel and hospitality industry, MGM Resorts has been hard hit by the COVID-19 pandemic. The company`s revenue and earnings have been significantly affected by the closures of its properties, as well as reduced demand due to travel restrictions and social distancing measures.
The new credit agreement gives MGM Resorts additional liquidity and financial flexibility to help it weather the ongoing crisis. It also provides the company with more time to recover from the impacts of the pandemic by extending the maturity of its debt and easing its debt covenants.
What are the Terms of the MGM Credit Agreement?
Under the new credit agreement, MGM Resorts has secured $1.5 billion in financing from a group of lenders led by JPMorgan Chase. The financing consists of a $1 billion revolving credit facility and a $500 million term loan.
The revolving credit facility gives MGM the flexibility to draw on the funds as needed, while the term loan provides a fixed amount of financing that is repaid over a set period of time. The interest rate on the financing is also based on a benchmark rate, such as LIBOR.
In addition to the financing, the new credit agreement also includes certain financial covenants that MGM must meet. These covenants are designed to ensure that the company maintains a certain level of financial stability and can continue to service its debt obligations.
Conclusion
The new $1.5 billion credit agreement secured by MGM Resorts provides the company with much-needed liquidity and financial flexibility during a challenging time for the travel and hospitality industry. With this financing in place, MGM is better positioned to navigate through the pandemic and emerge stronger on the other side.