The trade has an estimated value of $900 million, not taking into account the tax settlement earnings that are to be received by the hotel in the upcoming months.
MGM now fully owns Atlantic city’s most iconic casino
The trade is most likely due to Borgata’s debt, one of the most popular casinos of the East Coast since its opening. As of late, Atlantic City has seen a reduction in visitors, to which Republican Governor Chris Christie prompted Jim Murren, MGM Resorts International CEO, to carry on the transaction as there was going to be a financial rescue package for Atlantic City.
According to Boyd Gaming CEO Keith Smith, the transaction is an ideal opportunity to bring value to the company’s shares, as the earnings are going to be used towards the reduction of debt. MGM Resorts International is also holding the other 50 percent ownership.
Boyd Gaming is one of the leading casino gaming companies in the world. It has its headquarters in Las Vegas and through the sale of Borgata, MGM has full ownership of the property. MGM’s share of the Borgata was going to be sold back in 2012, but nobody wanted to buy it. Now the casino is dealing with $180 million in back tax appeals, which is why a state court allowed it to stop paying property taxes until its debt is solved.
The trade is expected to take place in 2016’s third quarter, and it includes the Borgata Casino and Hotel plus the Water Club Hotel, both in Atlantic City’s Marina District. Jim Murren states that, although the situation has been challenging, they expect the Borgata to excel as the leader in casino gaming in Atlantic City. As of late, 12 of Atlantic City’s casinos were forced to close, and at least 1,000 employees had were fired.
MGM is also the owner of several casinos in Las Vegas, including Bellagio, Mandalay Bay, and The Mirage, while also holding ownership of the MGM Macau, located in China.
Behind the million-dollar trade
Atlantic City has been on the verge of bankruptcy for quite some time now. The city is submerged in a deficit of $100 million, where a recent payment of $1.8 million almost caused the city to default. The city is currently expecting $60 million in loans sought after by the state government, so it doesn’t completely lose financial stability. At first, Governor Christie was against the plan, as it is known that he declined to grant loans for the city at least on two other separate occasions, but it seems that the crisis is such that he had to sign for the gambling enclave.
The decision has undergone many lobbies and conversations. It seems that MGM’s purchase of the totality of the Borgata has a direct correlation with Atlantic City being flooded in debt.
Source: Salt Lake Tribune