Murren said leads have not yet been chosen on the deal, though market sources indicated The Royal Bank of Scotland and Bank of America would be lead bookrunners and joint lead arrangers. Spokespeople for the two banks did not return calls by press time. No titles have been handed officially, Murren stated, but he said B of A has led every deal MGM has run and will certainly be involved. He said RBS is among the banks that care about MGM and has a strong position in the gaming market, but he also mentioned J.P. Morgan, Citigroup, Deutsche Bank, Wells Fargo Bank, BNP Paribas, Scotia Capital, Wachovia Securities, Société Générale, Commerzbank and Barclays as important relationships.
Murren explained that the willingness to lend is a function of the bank market, but also the effect of MGM delivering for its bank group. In 2000 the company bought the Mirage for $6.4 billion, using $4.3 billion in bank financing with total leverage of 5.5 times. Prior to this acquisition leverage is 4.2 times. "Despite everything since 2000 that the hospitality industry has gone through, we've delivered and more. We're having a record year and all along the way we have provided the banks with a tremendous amount of information. We give a lot of disclosure and we work very hard to deliver financial results for the banks. They look at MGM as a place to put money," he said.
MGM is buying Mandalay for $4.9 billion in cash, plus the assumption of $2.8 billion in debt. According to a lending source, a bank meeting will be held in Las Vegas in the coming week to launch the five-year deal, comprising a $4.5 billion revolver and a $1.5 billion "A" loan. Pricing is LIBOR plus 1 3/4% and tickets of $550 million, $450 million and $350 million are being offered. "Every bank is going to do this," said one lender, noting that not only is this the biggest gaming deal out there but it will be very important to maintain relationships with the corporate.