MGM takes full control of Borgata

MGM takes full control of Borgata

Wednesday, June 1, 2016 Totally Gaming
The company is to buy Boyd's half of the Atlantic City resort

MGM Resorts is to become the sole owner of Atlantic City’s top casino after agreeing to buy Boyd Gaming’s half of the Borgata.

The deal, which is set to be completed in the third quarter of this year, is worth $900m (€806.0m) plus half of any future tax settlement MGM reaches with the Atlantic City authorities.

MGM chief executive Jim Murren said the deal proves his company’s belief in the Borgata, which has been the resort’s top-performing casino since shortly after it opened in 2003, despite Atlantic City's recent financial struggles. The casino property reported first-quarter net revenue of $812m and $212m in adjusted earnings

"We believe Borgata's best days are yet to come," he said. "When you've got a great property that's carefully cared for in a market as large as Atlantic City, you can and should do well."

Murren said he was encouraged by a financial rescue package approved by state lawmakers and signed into law last week by Governor Chris Christie, but he said the company would have made the deal even without it. "I just never believed Borgata and Atlantic City would be ignored by the state of New Jersey," he said.

Boyd said it will use the proceeds to reduce debt and strengthen its balance sheet. It expects to receive $600m in cash after deducting its share of the Borgata's outstanding debt.

"While we are pleased with the performance of this property, this transaction is an attractive opportunity to immediately unlock significant value for our shareholders," said Keith Smith, Boyd’s chief executive.

The Borgata is owed about $180m in back tax appeals and interest from the cash-strapped city government in a case that has yet to be resolved. A judge has let the Borgata stop paying its property taxes as long as the city is unable to pay the casino what it owes in successful tax appeals.

TotallyGaming.com says: “This is quite a turnaround, considering MGM put its share of the Borgata up for sale in 2010. It comes at an important time for Atlantic City, with MGM seemingly buoyed by last week’s bail out deal from New Jersey.”

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