MGM Resorts International may use a revolving credit line to supplement cash spending for building casinos in Maryland and Massachusetts, according to Chief Financial Officer Dan D’Arrigo.
The gaming and entertainment company may draw on its $1.2 billion bank line as it seeks to spend about $1 billion to construct a casino at the National Harbor complex in Prince George’s County, Maryland, by 2016, D’Arrigo said. It may also borrow to supplement spending on an $800 million casino it expects to build in Springfield, Massachusetts, depending on whether voters pass a ban on casino gambling in November, he said.
MGM had $748.3 million of free cash flow in 2013, and $1.11 billion of cash and equivalents as of March 31, according to data compiled by Bloomberg. Capital expenditures may increase to $1.8 billion in 2015, from $562.1 million last year, possibly turning free cash negative, according to analyst estimates compiled by Bloomberg.
D’Arrigo declined to comment on how much the Las Vegas- based company might draw on the revolver.
“Clearly we have enough capacity, and our cash flows are continuing to improve,” D’Arrigio said in a July 2 telephone interview. “Everything is heading in the right direction to minimize the amount of borrowings we have under the revolver.”
Free cash flow is money available to repay debt, reward shareholders with dividends and stock buybacks, or reinvest in a business.
Japanese Prime Minister Shinzo Abe has a “very good chance” of successfully passing a law to legalize casinos in that country this year, D’Arrigo said. If it happens, depending on the regulatory environment, tax structure and location, a potential MGM project there might range from $5 billion to $10 billion, he said.
“We’re working hard on that front, and we feel as well positioned as anyone to take advantage of those opportunities should gaming come to Japan,” D’Arrigo said.