US gambling group Boyd Gaming Corporation announced Tuesday that it has agreed to sell its 50 percent equity interest in Marina District Development Holding Company, the parent company of Borgata Hotel Casino and Spa in Atlantic City, New Jersey, to MGM Resorts International for consideration of $900 million, as well as a 50 percent 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.”
The transaction is expected to close in the third quarter, and upon closure MGM will fully own the property and assume oversight of the property's day-to-day operations.