Decision frees partner MGM Resorts International to move ahead with plans to sell its half of the resort and exit Atlantic City
Boyd Gaming said it won’t bid to own 100 percent of Borgata Hotel Casino Spa, freeing joint-venture partner MGM Resorts International to move ahead with plans to sell its half of the resort and exit Atlantic City.
“Given other opportunities and our current focus on deleveraging our balance sheet, the current offer would not provide a sufficient return on investment for our shareholders,” Las Vegas-based Boyd said in a statement.
Boyd is declining to match an offer of $250 million reportedly submitted by Leonard Green & Partners, a Los Angeles-based private equity firm with holdings in several big brands, including Whole Foods Market, Sports Authority and fitness club operator Equinox, but no gaming assets.
MGM said in a regulatory filing that it “intends to pursue negotiations” to sell its stake in Borgata.
Las Vegas-based MGM opted to leaving Atlantic City rather than end its casino partnership with Pansy Ho in the lucrative Macau market. The New Jersey Division of Gaming Enforcement has found Ho to be an unsuitable partner based on her business ties to her father, Macau casino mogul Stanley Ho, who is alleged to have connections to Asian criminal gangs, although he has never been charged.
Meanwhile, Atlantic City’s troubles continued through September. Gaming revenue for the resort’s 11 casinos was down a combined 11.6 percent from the same month a year ago, closing out a disappointing summer that was negatively affected by increased competition from Pennsylvania and poor weather over the Labor Day weekend. Atlantic City has suffered 25 straight months of revenue declines.
Borgata, normally the city’s most profitable casino, announced it is cutting its workforce by 3 percent, meaning about 200 jobs will be lost. The resort saw net revenues fall 6.7 percent in the third quarter. EBITDA declined by 19.6 percent.
Company-wide, Boyd reported an 18.2 percent drop in EBITDA for the third quarter on a decline in net revenues from $620.8 million to $594.5 million. Net income was $5.6 million, or 6 cents per share, compared to $6.3 million, or 7 cents per share, in the same period last year.
Boyd won't match Borgata offer
October 26, 2010