MGM Mirage wins 11th-hour reprieve
By Matthew Garrahan in Los Angeles
Published: March 17 2009 23:50 | Last updated: March 17 2009 23:50
MGM Mirage has obtained an 11th-hour reprieve from its lenders with a waiver that will allow the heavily indebted casino operator to stay afloat for the next two months.
The company, owner of the Bellagio, Mirage and MGM Grand casinos, has been hit by a steep decline in visitors to Las Vegas and recently warned that it risked defaulting on its debt.
EDITOR’S CHOICE
MGM Mirage appoints adviser - Mar-05
Lex: MGM Mirage - Mar-05
MGM Mirage warns of debt default risk - Mar-04
Las Vegas bets on future of hotel rooms - Jan-25
MGM Mirage chief steps down - Nov-14
MGM junk bond sale comes at a high price - Oct-31
But frantic negotiations with its lenders have won the group some breathing space. It will spend the next two months trying to raise new funds either in the debt markets, from shareholders such as Kirk Kerkorian, or by selling its assets.
The debt waiver has come at a cost. Under the terms of the amendment, MGM Mirage repaid $300m of its senior revolving credit facility and will be hit by a 100 basis point interest rate increase for that facility.
“While there is still work to be done, this is a positive step that provides us with the opportunity to continue to work with our financial advisers and our bank group in addressing the company’s current financial position,” said Jim Murren, chief executive.
In a conference call with analysts he added that lenders could demand immediate repayment of outstanding borrowings in the event of a covenant default. “We can provide no assurances that we will be able to obtain additional covenant relief,” he said.
Shares in the group rose more than 5 per cent in after-market trading. The uncertainty surrounding MGM Mirage had cast a gloom over the gaming sector, which has been battered by the recession.
MGM Mirage’s fourth-quarter results revealed the extent of the damage inflicted on Las Vegas by the economic slump. Although occupancy for the three months to December 31 was high at 81 per cent, revenue per available room – the key industry indicator – fell from $145 to $114.
Fourth-quarter revenues fell from $1.9bn to $1.6bn. The company swung to a loss of $1.1bn from a profit of $872m last time, which had been lifted by a one-time gain related to the sale of a stake in its CityCenter project.
By Matthew Garrahan in Los Angeles
Published: March 17 2009 23:50 | Last updated: March 17 2009 23:50
MGM Mirage has obtained an 11th-hour reprieve from its lenders with a waiver that will allow the heavily indebted casino operator to stay afloat for the next two months.
The company, owner of the Bellagio, Mirage and MGM Grand casinos, has been hit by a steep decline in visitors to Las Vegas and recently warned that it risked defaulting on its debt.
EDITOR’S CHOICE
MGM Mirage appoints adviser - Mar-05
Lex: MGM Mirage - Mar-05
MGM Mirage warns of debt default risk - Mar-04
Las Vegas bets on future of hotel rooms - Jan-25
MGM Mirage chief steps down - Nov-14
MGM junk bond sale comes at a high price - Oct-31
But frantic negotiations with its lenders have won the group some breathing space. It will spend the next two months trying to raise new funds either in the debt markets, from shareholders such as Kirk Kerkorian, or by selling its assets.
The debt waiver has come at a cost. Under the terms of the amendment, MGM Mirage repaid $300m of its senior revolving credit facility and will be hit by a 100 basis point interest rate increase for that facility.
“While there is still work to be done, this is a positive step that provides us with the opportunity to continue to work with our financial advisers and our bank group in addressing the company’s current financial position,” said Jim Murren, chief executive.
In a conference call with analysts he added that lenders could demand immediate repayment of outstanding borrowings in the event of a covenant default. “We can provide no assurances that we will be able to obtain additional covenant relief,” he said.
Shares in the group rose more than 5 per cent in after-market trading. The uncertainty surrounding MGM Mirage had cast a gloom over the gaming sector, which has been battered by the recession.
MGM Mirage’s fourth-quarter results revealed the extent of the damage inflicted on Las Vegas by the economic slump. Although occupancy for the three months to December 31 was high at 81 per cent, revenue per available room – the key industry indicator – fell from $145 to $114.
Fourth-quarter revenues fell from $1.9bn to $1.6bn. The company swung to a loss of $1.1bn from a profit of $872m last time, which had been lifted by a one-time gain related to the sale of a stake in its CityCenter project.