MGM AMENDMENT #7

Do I smell a converts deal and/or equity deal?

 

Yesterday, MGM announced that it entered into the 7th amendment to its credit agreement.  We wouldn't be surprised if MGM were to issue converts and/or equity on the back of a strong quarter and bullish conference call.

 

This most recent amendment allows MGM to issue new debt as long as that debt doesn't have seniority over the bank debt or debt that is being refinanced with the issuance proceeds and extends MGM's maturities.  It also allows for an equities issuance that doesn't result in a change in control.  The only give back from MGM is to permanently reduce the bank debt commitment upon any issuances that aren't going towards reducing existing maturing bonds. Below is a summary of Amendment #7.

  • Allow MGM to incur an additional $1BN of debt, provided that the debt is unsecured and covenants are no more restrictive than those contained in MGM's current "Qualified Unsecured Debt"
  • Other than the first $250MM, 50% of the proceeds from any issuance are required to pay down "Qualified Unsecured Debt", specifically proceeds will go towards permanently reducing MGM's term loan and revolving credit facility on a pro-rata basis
  • MGM may also issue "Refinancing Indebtedness" so long as the Refinancing Indebtedness:
    • Has a maturity that dates six months post the maturity of the Credit Agreement and is longer dated than the debt it is meant to take out
    • Is not senior to the Refinanced Indebtedness
    • Amount is not more than 125% of the Refinanced Indebtedness
    • Covenants are no more restrictive than those contained in the company's existing senior secured indentures
  • Company may issue additional equity so long as such issuance does not result in a change of control
    • Other than the first $500MM, MGM must apply 50% of the net proceeds from any issuance towards the permanent reduction of MGM's term loan and revolving credit facility on a pro-rata basis

SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more