Casino operator MGM China has funds for 15 months

Bernstein Research took a detailed look at the liquidity of MGM Resorts and MGM China in a report issued last week and concluded that MGM China has funds to operate for up to 15 months even under Covid-19 worst case scenarios.

The analysts wrote: “As of year-end, MGM China had HK$3bn in cash on hand (adjusted for dividends announced) and HK$4.5bn under the revolver, bringing total availability to HK$7.5bn.

“In the unlikely worst case scenario where casinos were to be shut down (or with very low level of business) for an extended period of time and with limited ability to reduce expenses, MGM China has cash on hand to run for six months assuming worst case scenario of no revenues. By drawing fully on its revolver (with no other cost reductions), the operation would have run rate of 15 months.”

The parent company, MGM Resorts, could operate for a year without needing additional capital under similar conditions, they project. Bernstein noted that there is discussion of MGM leaving Macau, but they concluded that these rumours are unlikely to come to fruition.

Source: Asia Gaming Brief