Boyd Gaming Completes Exit from Borgata Ownership Partnership
Boyd Gaming has announced that it has finalized the sale of its half of New Jersey’s Borgata Hotel Casino & Spa to its former ownership partner, MGM Resorts International. In a brief press announcement, Boyd confirmed its final exit from the Borgata equation, leaving only possible future tax adjustments to be dealt with as they occur.
The Boyd statement:
Boyd Gaming Completes Sale of 50% Interest in Borgata
LAS VEGAS — Boyd Gaming Corporation (“Boyd Gaming”) (NYSE: BYD) today announced that it has completed the previously announced sale of its 50% equity interest in Marina District Development Holding Co., LLC, the parent company of Borgata Hotel Casino & Spa in Atlantic City, New Jersey, to MGM Resorts International (NYSE: MGM).
Boyd Gaming received net cash proceeds of $589 million from the transaction, after deducting its share of Borgata’s currently outstanding debt. These proceeds do not include Boyd Gaming’s 50% share of any future property tax settlement benefits. Borgata estimates that it is entitled to property tax refunds totaling $160 million, including amounts due under court decisions rendered in its favor and estimates for open tax appeals.
Boyd Gaming plans to use proceeds from the transaction for debt reduction and general corporate purposes.
The nearly $600 million in net cash proceeds was combined with another $300 million or thereabouts in forgiven debt on the Borgata’s books that will now become the sole responsibility of MGM. Boyd Gaming is known for its ownership of a wide variety of casino properties across the US, including the Orleans and Gold Coast in Las Vegas, along with three downtown vegas properties.
The Boyd-MGM partnership that brought New Jersey’s Borgata to life in 2003 created Atlantic City’s leading casino property over the last decade, though Atlantic City’s declining fortunes and a hefty property devaluation that occurred in 2013 contributed to Boyd’s desire to get out of its Borg partnership and focus on its other properties and ventures. The deal with MGM that ends Boyd’s involvement in the Borgata was announced last May and was approved by New Jersey’s Casino Control Commission less than three weeks ago, clearing the way for yesterday’s finalization of the deal.
No changes are expected in the Borgata’s day-to-day operations, either in the live or online niches. The Borgata’s own operational licenses are controlled through Borgata parent entity Marina District Development, LLC. That specific entity is what now moves to sole MGM Resorts ownership, and all operations continue without interruption.
If there’s one odd twist to the story, it’s that a few years ago, it was MGM (then MGM Mirage) which was on its way out of the Borgata partnership. Back in 2010, MGM Mirage announced plans to sell its share of the Borgata and stop doing business as a gaming licensee in New Jersey, due to ongoing questions about the possible ties of MGM Mirage exec Pansy Ho to Chinese organized crime. However, New Jersey regulators’ clampdown regarding Ho, the daughter of Asian billionaire Stanley Ho, eased after Pansy Ho reduced her own ownership involvement in MGM Macau.
By 2014, New Jersey regulators had reversed their stance, allowing MGM to continue doing business in the state, yet only two years later, it’s partner Boyd Gaming heading to the door. Such is the nature of the casino industry.
Local industry analysts are accentuating the positive regarding the split, citing MGM Resorts’ willingness to acquire the remaining half of the Borgata as clear evidence of faith in the future of both the property and Atlantic City as a whole.
“It’s a vote of confidence to have an entity like MGM make a deal like this,” market-research firm Spectrum Gaming’s Michael J. Pollock told the Press of Atlantic City. “A deal like this might prompt others to take a look at the city. I think that MGM sees the future of Atlantic City as an East Coast entertainment destination.”