MGM looks to Japanese banks to fund casino

Wednesday 10th of September 2014

MGM Resorts International (MGM) is interested in low interest rates in Japan to provide financing for a possible casino development in the country, president Bill Hornbuckle told Bloomberg in an interview.
The company could borrow up to $10 billion from Japan’s banks, he said in the interview in Tokyo.
“We like low interest rate money, it’s important, If you’re going to be borrowing between $3 billion and $7 billion, you’d want to be able make sure you get through the day,” he said.
Casino projects usually have debt/equity ratios of around 60/40, and in February both MGM and the Las Vegas Sands Corp said that they could invest between $5B and $10B in Japan.
Hornbuckle is visiting Japan to talk to potential consortium partners including real estate developers and banks.
Hornbuckle said in the interview it was still too early to say how much MGM would need to borrow as regulations and the business environment were still unclear. He also declined to name specific financial institutions MGM has met for talks.
Bloomberg quoted Hornbuckle as saying “(The banks) understand the vibe of the marketplace, they understand the vibe of real estate. They will understand the development side of this equation fairly well because they’ve been engaged in several of the projects. We will look to that knowledge.”
The benchmark 10-year government bond rate in Japan is currently 0.6 percent, the second lowest in the world after Switzerland.
MGM, which runs the Bellagio and Mandalay Bay in Las Vegas and has a 51-percent stake in Macau’s MGM China Holdings Ltd., would also consider borrowing from non Japanese financial institutions. USJ Co., the operator of Osaka city’s Universal Studios Japan, said last month it has been in talks with operators including MGM for a possible partnership to run a casino resort in Japan.