[영문] MGM Mirage Casino may Default on Debt

By Park Sae-jin Posted : March 4, 2009, 17:57 Updated : March 4, 2009, 17:57
   
 
Photo: The gambling company MGM Mirage Inc. said Tuesday that it may default on its debt.

MGM Mirage Inc., the gambling company owned by billionaire investor Kirk Kerkorian, said Tuesday that it may default on its debt amid development of its biggest casino project ever, the $8.6 billion CityCenter in Las Vegas.

Unless the economy turns around and more people start gambling again, the Las Vegas-based casino company believes it will break its loan agreements this year, it said in a filing with the Securities and Exchange Commission.

That would mean a default on its senior credit facility, which MGM has asked to modify.

MGM Mirage will delay filing its annual report until March 17 because it is still assessing its financial position and liquidity needs, the company said in Tuesday's unscheduled filing. One factor in the delay, the company reported, was its decision last week to tap $842 million of its $4.5 billion senior revolving credit agreement to cover general expenses.

As of the end of September 2008, MGM Mirage had $13.29 billion in long-term debt.

Many U.S. casino companies borrowed huge sums in the last few years to develop resorts in the United States and abroad. But several are having trouble making payments on that debt because their revenue has fallen sharply over the past year as fewer patrons spend less money on gambling and services.

Chief Executive Jim Murren, who took over late last year, has said the company is exploring a half-dozen deals around the world in which MGM Mirage would lend its name and expertise to generate income.

It sold the Treasure Island casino on the Las Vegas Strip to Kansas billionaire Phil Ruffin for $775 million and has since been shopping other properties, including nearly 300 acres of land in Nevada and Atlantic City, N.J., and two airplanes.

MGM Mirage has not reported on its financial position since September nor posted its earnings for the quarter that ended Dec. 31.

The March 17 report is to include an auditor's assessment of whether MGM Mirage can continue as a company.

MGM Mirage has said it still needs to raise $1.2 billion to finish CityCenter on the Las Vegas Strip. The 67-acre complex of hotels, a casino, condos and retail space has been called the largest privately financed project in U.S. history. CityCenter is a joint venture of MGM Mirage and Dubai World subsidiary Infinity World Development Corp. Dubai World also owns a 9.4 percent stake in MGM Mirage.

Analyst Robin Farley of UBS Investment Research told investors on Tuesday that MGM Mirage and Dubai World each need to fund about $1.3 billion for CityCenter this year.

"MGM had expected to fund their portion with condo sales proceeds; however, we expect many of the condo sales may not close," Farley said.

MGM Mirage's profit during the first three quarters of 2008 fell 59 percent compared with the same period in 2007, from $712.21 million to $292.7 million.

Shares of MGM Mirage dropped 37 cents, or 14 percent, to $2.25 in after-hours electronic trading. It ended the regular session at $2.62, down 43 cents or 14 percent from its previous close. The stock has lost most of its value since peaking at $64.73 last March.

By Oskar Garcia(AP)

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