uring a Michigan Gaming Control Board special meeting which took place virtually, MotorCity Casino Hotel received approval on Monday for its debt restructuring. The four board members voted unanimously in favor.
Under the plan, the Marian Ilitch-owned casino resort near downtown Detroit would move from a $15 million revolving credit facility to a $45 million revolver, CrainsDetroit reports.
According to MotorCity President Bruce Dall that would give the business extra financial padding in the event of another disruption, such as the COVID-19 pandemic that shut it down temporarily for months earlier this year.
"If there were a second closure, we could last over 18 months," Dall said during the meeting. "Quite frankly, if things were that bad, and it went 18 months, I think we'd have bigger issues or problems to deal with."
MotorCity's new financing would also consist of up to $570 million in the combination of a five-year term loan and senior unsecured notes, according to a presentation during the meeting. Its previous financing model included a $282 million term loan and $200 million in senior unsecured notes.
The refinancing comes amid upcoming maturities of its existing debt next summer and in 2022. Dall said he is aiming to close the deal by the end of the week, just before a Nov. 3 presidential election that could rattle the market.
Crain's reached out to MotorCity Casino on Monday afternoon for more information about its debt refinancing.
The other question mark looming over MotorCity and businesses across the state is the pandemic. Cases have increased sharply heading into winter, prompting worries of another economic shutdown.
MotorCity, along with Greektown Casino-Hotel and MGM Grand Detroit, were ordered closed March 16 before reopening at 15 percent capacity in early August. The casinos lost more than $555 million in revenue while closed.
MotorCity moved to lay off 2,500 employees at the end of July but said it planned to bring back around half of them when it reopened.
Dall said the casino's gross gaming revenue in August was about 63 percent of what it took in the same time last year. That ticked up to 83 percent in September, and Dall said revenue in October is expected to rebound to 85 percent-90 percent of where it was in October 2019.
The parent companies of MGM Grand Detroit (MGM Resorts International) and Greektown (Penn National Gaming) are scheduled to release third-quarter earnings reports Thursday. The casinos declined to comment on financials until after calls with investors later this week.
The U.S. casino industry is seeking tax and regulatory relief from the government as it tries to recover from the coronavirus outbreak, which cost states more than $2 billion in lost tax revenue while casinos were shut down for at least four months this year.
The city of Detroit lost $600,000 in gambling tax revenue for every day its three casinos were closed down.
While 90 percent of casinos have reopened, including in Michigan, they are operating at restricted levels to try to slow the spread of the coronavirus, and additional financial aid is needed for casinos and their workers, American Gaming Association President Bill Miller said Tuesday.