Boyd Gaming Corporation (NYSE: BYD) yesterday announced that it has entered into a definitive agreement to sell its 50% equity interest in Marina District Development Holding Company, LLC, the parent company of Borgata Hotel Casino & Spa in Atlantic City, New Jersey, to MGM Resorts International (NYSE: MGM)for consideration of $900 million, as well as a 50% share of any future property tax settlement benefits received by Borgata.
Boyd Gaming expects to initially receive approximately $600 million in net cash proceeds from the transaction, after deducting its share of Borgata's currently outstanding debt. These initial proceeds do not include Boyd Gaming's potential share of future property tax settlement benefits. Borgata estimates that it is entitled to property tax refunds totaling $180 million, including amounts due under court decisions rendered in its favor, and estimates for open tax appeals.
Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: "The development and opening of Borgata in 2003 was an important step in the evolution and growth of Boyd Gaming. Under our leadership, Borgata firmly established itself as the East Coast's most popular and successful entertainment resort throughout the last 13 years. While we are pleased with the performance of this property, this transaction is an attractive opportunity to immediately unlock significant value for our shareholders. We intend to use the proceeds to reduce debt, further strengthening our balance sheet and accelerating the timeline for reaching our leverage target of four to five times debt to Adjusted EBITDA."
Smith added: "The consistent success of Borgata is a tribute to the entire Borgata team, as they have continued to outperform an evolving and challenging Atlantic City market. We thank them for their tremendous contributions to Borgata and Boyd Gaming, and we wish them continued success as they join the MGM team."
The transaction is expected to close in the third quarter, subject to the satisfaction of customary closing conditions and the receipt of all required regulatory approvals. Upon closure of the transaction, MGM will fully own the property and assume oversight of the property's day-to-day operations.
Morrison & Foerster LLP served as legal advisor to Boyd Gaming for the transaction.
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