MGM Mirage and Pansy Ho Chiu-king, managing director of Hong Kong conglomerate Shun Tak Holdings, have brought together a team of eight international banks to lead a $700 million project financing for the construction of a casino and hotel in Macau. The complex, MGM Grand Macau, will be jointly operated by MGM Mirage and Pansy Ho. Dan D'Arrigo, senior v.p. of finance at MGM Mirage, said the company and its project partner Pansy Ho, chose several large U.S. and Asian banks to give strength and credibility to the financing, which will be MGM's first hotel/casino partnership with Pansy Ho in Macau.
"Typically you would pick one or two banks to lead the charge. But we like to get a lot of people involved," said D'Arrigo. "These lead banks were willing to come together and step up the plate early on." He added that some of these banks have never participated in gaming deals of this size before. "We put the banks together based on their international prominence and excitement for the project."
The lead banks are: Bank of America, The Hongkong and Shanghai Banking Corp., Banco Nacional Ultramarino, Bank of China, BNP Paribas, China Construction Bank, The Royal Bank of Scotland and Sumitomo Mitsui Banking Corp. D'Arrigo said MGM and Pansy Ho have relationships with the lead banks and were approached by the institutions to finance the project.
The financing consists of three tranches of yet to be determined sizes. There will be two delayed-draw term loans for the construction of the hotel and the casino, and a revolving credit facility. Initial pricing on all tranches is LIBOR plus 2 1/2%. After the complex opens, the cost of the facility will be based on a grid, which will adjust pricing according to the debt to EBITDA levels of the casino/hotel when it is in operation.
MGM Grand Macau will have 600 rooms, suites and villas, several restaurants and entertainment amenities. The project cost is budgeted at $1.06 billion. Construction is underway and the hotel/casino is due to open in the second half of 2007.