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MGM Resorts (MGM) Divests Stake in MGP to Boost Liquidity

Published 12/02/2020, 09:40 PM
Updated 07/09/2023, 06:31 AM

Maintaining liquidity has become a herculean task for most of the companies in the current scenario. MGM Resorts (NYSE:MGM) International MGM and MGM Growth Properties (NYSE:MGP) LLC MGP announced that MGP has redeemed nearly 23.5 million of MGM Resorts' operating partnership units for $700 million.

MGM Resorts will utilize $700 million for general corporate purposes. Following this redemption, MGM Resorts’ (excluding MGM China (OTC:MCHVY) and MGP) liquidity improved to nearly $5.9 billion. After the completion of this transaction, the company will have nearly 149 million units, which represent a 53% economic ownership in MGP.

Moreover, MGM Resorts has significant real estate assets in MGM Springfield, CityCenter in Las Vegas and in MGM China. Bill Hornbuckle, CEO and president of MGM Resorts, stated, "As the pandemic continues to impact operations at our properties across the U.S., we believe the opportunistic exercise of our redemption right as well as our recent senior notes offering allow us to continue pursuing our strategic goals while navigating the crisis.”

In an effort to maintain sufficient liquidity, the company cut dividend and lowered non-essential spending. Due to COVID-19 distress, earlier MGM Resorts announced the termination of its previously announced modified Dutch auction tender offer. As a result of this termination, the company withdrew the purchase of $1,250,000,000 issued and outstanding shares of its common stock.

Stock Price Performance

In the past three months, the company’s shares have surged 24.8% compared with the industry’s increase of 19%.



Sports betting and iGaming continues to be a major growth driver following the legalization of the same outside Nevada. The company continues to focus on sports-betting expansion. Recently, BetMGM and GVC Holdings announced second round of investment. This brings the total investment to $450 million. In the first round, the parties invested $200 million. Ever since its launch in 2018, the company has done extremely well and is on track to operate in 11 states by the end of 2020. Notably, BetMGM continues to gain market share. In September, sports betting as well as iGaming market share were approximately 18% in the states in which it operates. The company has also unveiled a streamlined betting experience on Yahoo Sports.

MGM Resorts, which shares space with Wynn Resorts (NASDAQ:WYNN), Limited WYNN and Las Vegas Sands (NYSE:LVS) Corp. LVS, carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Las Vegas Sands Corp. (LVS): Free Stock Analysis Report

MGM Resorts International (MGM): Free Stock Analysis Report

Wynn Resorts, Limited (WYNN): Free Stock Analysis Report

MGM Growth Properties LLC (MGP): Free Stock Analysis Report

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