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Caesars, MGM Resorts Tap Backup Loans as U.S. Casinos Close

MGM Resorts Plans to Tap as Much as $1.5 Billion in Backup Loans

(Bloomberg) -- Casino giants Caesars Entertainment Corp. and MGM Resorts International are drawing down their credit as they cope with coronavirus fallout, including shuttered casinos and what may be an extended slump for travel and entertainment.

Caesars said Monday that it would tap more than $1.15 billion from its revolving credit lines. Earlier, Bloomberg News reported that MGM is planning to draw down as much as $1.5 billion of its backup loans. The Las Vegas-based companies joined casino rivals such as Wynn Resorts Ltd. and Penn National Gaming Inc. in seeking to shore up their balance sheets as the global pandemic roils markets and forces closures.

MGM, Wynn and Las Vegas Sands Corp. were already hurt by a reduction in travel to their Macau properties, which were forced to close for 15 days last month. States ordering casinos to close in recent days to help prevent the spread of the disease include Massachusetts, Michigan and Ohio.

Nevada’s mighty casino industry can’t make up its mind about the virus, however. MGM Resorts and Wynn, two of the largest players on the Las Vegas Strip, said they would shut their casinos this week. Caesars and Sands are keeping their properties open.

“We will continue taking the recommended precautions necessary to keep our team members and guests safe,” Sands said in a statement.

On Sunday, Nevada Governor Steve Sisolak ordered schools and state offices closed statewide, but he stopped short of casinos, saying he would “strongly support” any operators that did close. The state told casinos to not let patrons serve their own food at buffets, to place no more than three chairs at each blackjack table and to wipe every slot machine at least once every two hours.

Caesars canceled shows. Casino operators have also been cutting workers. Employees and guests have been diagnosed with the virus in Las Vegas, and one person who worked at MGM’s casino in Yonkers, New York, died.

MGM shares plunged 34% on Monday to close at $10.25, the biggest one-day drop in more than three decades. The stock had already fallen more than 50% in the past month through the end of last week, outpacing declines in the S&P 500 Index.

The casino operator terminated an offer last week to buy back $1.25 billion in shares.

“We believe the company has ample liquidity to weather the current uncertainties in the marketplace,” Jim Murren, MGM’s chairman and chief executive officer, said at the time.

In addition to the revolving credit facility, the company has cash investments of about $2.4 billion.

To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, Craig Giammona

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