GM Grand, the Macau unit of MGM Mirage, held meetings in late April with some of the lender banks to its existing us$ 1.1 billion facility, which this deal would refinance, the sources said.
The us$ 1.1 billion financing was led by Banc of America Securities Asia, Banco Nacional Ultramarino, Bank of China Macau, BNP Paribas, CCB International Finance, Hang Seng Bank, HSBC Holdings, Royal Bank of Scotland and Sumitomo Mitsui Banking Corp . HSBC is the agent bank.
The refinancing is expected to comprise a term loan and revolving credit, both with five-year maturities. Macau's casino borrowers have returned to loan markets in recent months, to refinance deals or complete projects mothballed during the economic crisis when funding dried up.
The MGM deal follows us$ 1.75 billion five-year and us$ 1 billion six-year loans for Sands China Ltd and Galaxy Entertainment Finance Co Ltd, respectively. Sources said MGM was expected to favour a 10-15 bank club to complete its loan, a strategy also adopted by Galaxy.
In a club loan, a group of banks agrees to fund a borrower's needs without selling through a wider syndication. Club loans have become common over the last two years as they ensure funding for borrowers when liquidity is tight, and prevent banks from getting stuck with big positions if a syndication fails.
Sands China opted for a syndicated loan, but many bank investors declined to join, leaving underwriting banks to sell at a loss in the secondary loan market. Sands China is the Macau subsidiary of U.S. casino operator Las Vegas Sands, which is owned by billionaire Sheldon Adelson.
MGM, which is expected to go public in the second half of this year, had breached the financial covenants on its us$ 1.1 billion facility in March 2009, including interest coverage ratio and debt ratio requirements, but received a waiver from the lenders.