MGM has secured a $1 billion revolving credit line — a $335 million upgrade from what was previously available to the company.
The newly structured five-year deal was arranged by J.P. Morgan Chase with a syndicate of lenders. This revolving credit facility replaces MGM’s existing $665 million one, lowers its borrowing rate to LIBOR plus 2.25 percent and augments certain other terms within the agreement, the company said in a Wednesday media release.
The company behind the James Bond film franchise used some of the newly available money (plus cash) to prepay its $300 million second lien term loan, resulting in expected interest savings of approximately $50 million over its remaining term.
“I am truly honored and humbled by the vote of confidence in MGM demonstrated by the syndicate of lenders that supported this credit facility, many of whom were part of our prior facility,” said Gary Barber, MGM’s chairman and chief executive officer. “The size and structure of this new facility are indicative of MGM’s strong financial position and bright future, and will provide us with the financial flexibility to continue executing on our strategic growth initiatives.”
“Gary and the strong management team at MGM have established a tremendous track record of disciplined growth and success,” said David Shaheen, managing director of the Entertainment Industries Group for J.P. Morgan Chase. “We are very pleased to have assisted MGM in securing new capital to support their business initiatives and the additional strategic opportunities ahead of them.”
A revolving credit line basically allows one to operationally use funds as they are needed. The actual borrowed amount can fluctuate over time depending on an individual or company’s current cash flow needs.