International edition
September 25, 2021

MGM is working to come up with a plan to fund CityCenter by April 13

MGM Mirage and Colony said to be in talks on us$ 750 million loan

(US).- MGM Mirage is in talks with private equity firm Colony Capital LLC to obtain a secured loan of as much as us$ 750 million to help refinance the casino company’s debt, sources said.

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olony may invest in corporate debt secured by a lien on one or more MGM Mirage casinos, said the people, who declined to be named because talks are private. Australian gaming company Crown Ltd. may participate, said the people. An investment in CityCenter, MGM Mirage’s unfinished Las Vegas Strip project with Dubai World, is unlikely, one of the people said.

MGM Mirage, controlled by Kirk Kerkorian, is working to come up with a plan to fund CityCenter by April 13, when lending waivers for the multibillion-dollar development expire. State-owned Dubai World has sued and asked to be relieved of financing obligations, a move that threatens to throw CityCenter into bankruptcy. MGM Mirage has until May 15 to offer a plan to restructure its overall debt.

“We continue to work with our lenders to find a solution to our financial situation,” MGM Mirage spokesman Gordon Absher said yesterday. He wouldn’t discuss specifics of negotiations.

Colony hired Morgan Stanley to advise on the potential debt investment in MGM Mirage, the people said. Spokespeople for Los Angeles-based Colony Capital and Morgan Stanley declined to comment.

MGM Mirage rose 88 cents, or 19 %, to us$ 5.53 yesterday in New York Stock Exchange composite trading. The shares have more than doubled in the past four sessions.

Las Vegas-based MGM Mirage covered Dubai’s half of a us$ 200 million construction payment on CityCenter last month. The casino company has about us$ 1.05 billion of corporate bonds maturing this year and us$ 1.08 billion due in 2010, according to Bloomberg data.

A spokesman for billionaire James Packer’s Crown yesterday denied an April 3 report in the Wall Street Journal that the Melbourne-based company, the largest casino operator in Australia, may invest directly in CityCenter.

“Crown is not having any discussions with MGM or Dubai World with respect to any such investment in CityCenter,” the Melbourne-based company said in an Australian stock exchange filing.

Dubai World and MGM Mirage are obligated to fund about us$ 800 million more in construction costs before they can access a us$ 1.8 billion loan to complete CityCenter. Located on 67 acres between MGM Mirage’s Bellagio and Monte Carlo resorts, CityCenter is scheduled to open in December and has been under construction since 2005.

MGM Mirage’s restructuring effort coincides with the worst gambling decline on record on the Las Vegas Strip, where MGM Mirage is the largest owner of casino resorts, with properties that also Mirage and Mandalay Bay. The company separately hired Morgan Stanley to evaluate bids for its casinos in Michigan and Mississippi, a person close to the gaming company said on April 4.

MGM Mirage Chief Executive Officer James Murren said in a January 8 interview he was considering casino sales, in addition to refinancing maturing bonds and buying back some notes trading at discounted levels, as he overhauls the company’s balance sheet. Murren completed the us$ 775 million sale of the Treasure Island hotel on the Strip to investor Phil Ruffin in March.

In November, MGM Mirage raised us$ 750 million selling bonds with a 15 % yield, offering investors a lien against the New York New York casino resort in Las Vegas as collateral. The company’s us$ 7 billion senior credit facility and most of its other bonds are unsecured.

Senior lenders led by Bank of America granted MGM Mirage a two-month waiver on March 17 to come up with a debt restructuring plan after auditors questioned the company’s ability to stay in business.

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