[Updated to indicate the financial results are preliminary data provided by MGM Resorts International]
Net revenue generated by MGM China has fallen 63 per cent year-on-year in the first quarter of this year, reaching about US$272 million (MOP2.1 billion), the company’s latest financial report indicated.
The financial information is preliminary data provided by an MGM Resorts International filing at the Hong Kong Stock Exchange.
As the Covid-19 pandemic continued to impact gaming concessionaires’ results, MGM China revealed that its Macau properties are incurring cash operating expenses, exclusive of rent, interest, variable gaming taxes, corporate expense and expected capital expenditures, of approximately US$1.5 million per day.
Adjusted Property EBITDAR generated by the group also dropped from US$193 million in the first quarter of last year to some US$22 million this year in losses.
The government of Macau asked that all casino operators in Macau suspend operations for a 15-day period commencing on February 5, while several travel and entry restrictions in Macau, Hong Kong and certain cities and regions in mainland China remain in place.
As with other gaming operators, these factors significantly impacting visitation to MGM China’s properties, with the group also indicating that it may be impacted by competition for limited labour resources and its ability to retain and hire employees.
‘We compete with a large number of casino resorts for a limited number of employees and we anticipate that such competition will grow in light of the opening of new developments in Macau. While we seek employees from outside of Macau to adequately staff our resorts, certain Macau government policies limit our ability to import labour in certain job classifications,’ MGM noted.
‘For instance, the Macau government requires that we only hire Macau residents as dealers in our casinos) and any future government policies that freeze or cancel our ability to import labour could cause labour costs to increase’
The crisis has also led MGM China to enter into a further amendment to its credit agreement, effective April 9, 2020 that provided for a waiver of its maximum leverage ratio extending through the second quarter of 2021, and a waiver of its minimum interest coverage ratio beginning in the second quarter of 2020 through the second quarter of 2021.
As of March 31, 2020, US$826 million was drawn on the US$1.25 billion MGM China revolving credit facility, with the group having US$2.3 billion in outstanding debt.