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Apr. 17, 2009
Copyright © Las Vegas Review-Journal

Report: Group trying to force MGM into bankruptcy

Resorts officially up for sale

By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL

Carl Icahn
Billionaire investor said to be part of group buying MGM Mirage corporate bonds

The former owner of the Stratosphere and a large investor in Cannery Casinos are reportedly trying to force MGM Mirage into bankruptcy.

The Wall Street Journal on Thursday said that corporate raider Carl Icahn and private equity fund Oaktree Capital Management have purchased large amounts of MGM Mirage's corporate bonds in hopes of forcing the Strip casino giant into filing for bankruptcy to restructure the company's $13.5 billion debt.

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    • The newspaper cited sources familiar with the matter.

    MGM Mirage is under pressure from its lenders to come up with a solution for its liquidity issues. In March, lenders gave the company a stay until May 15 to meet covenants on its debt obligations. MGM Mirage executives have said in filings with the Securities and Exchange Commission that the company could be forced into bankruptcy if it can't reach a solution on its debt obligations.

    MGM Mirage spokesman Alan Feldman couldn't comment directly on the Icahn-Oaktree reports, saying the company is continuing "constructive" discussions with its lenders.

    Icahn, a billionaire financier, sold the Stratosphere, two Arizona Charlie's casinos and the Aquarius in Laughlin for $1.2 billion in February 2008.

    A woman answering the phone at his office at Icahn Enterprises said, "Only Carl Icahn can speak to the media on behalf of the company."

    Nicole Adrien, director of investor relations for Oaktree, which owns 42 percent of Cannery Casinos, said she couldn't confirm whether the private equity group had made any MGM Mirage bond purchases.

    Sources told the newspaper that Icahn and Oaktree have told MGM Mirage officials that bankruptcy is the company's best option.

    Gaming Control Board Chairman Dennis Neilander said the agency doesn't track bond purchases and there aren't requirements for casino companies to report debt acquisitions. However, gaming regulators could ask company officials for a list of their bondholders.

    If the control board were concerned that debtholders were trying to exert control over management, Neilander said, the agency has the ability to call the parties forward for licensing.

    MGM Mirage is facing battles on two fronts -- about its huge corporate debt and about its feud with Dubai World, its 50-50 joint venture partner in the $8.7 billion CityCenter over financing the massive project.

    MGM Mirage is expected to make a $70 million equity payment on CityCenter today. The payment includes the 50 percent share owed by Dubai World.

    The investment arm of the Persian Gulf emirate sued its partner last month over CityCenter, questioning the viability of the development and accusing MGM Mirage of mismanaging the project's construction, which has led to cost overruns.

    On the corporate side, MGM Mirage officially put the company's resorts in Detroit and Biloxi, Miss., on the market this month, hiring Wall Street investment firm Morgan Stanley to evaluate sales offers for the two casinos.

    Analysts believe selling the MGM Grand Detroit and the Beau Rivage could fetch the company between $1.5 billion and $2 billion, which would help MGM Mirage resolve some of the company's liquidity issues.

    One gaming analyst believes MGM Mirage is under pressure from its lenders to sell the two resorts.

    Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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    Vegas98765 wrote on April 22, 2009 10:23 AM: City Center is the worst disaster to be built in Vegas.

    Vegas is not New York, yet, some groups are trying to turn something unique into something ordinary with their mundane styles. The elegant view of the Bellagio is now shielded by the ugliness of City Center.

    To this day, I still respect the beauty & elegance that Steve Wynn and his investors have added to Vegas. Nothing else compares.


    Kerkorian has never been known to have style or class.


    mark wrote on April 17, 2009 11:12 PM: good! I would like to see mgm go to hell! you go carl brake em leave them in ruin, like you did the airline go carl, go carl, go carl


    ET wrote on April 17, 2009 08:46 PM: Carl has nothing to cry over,if he bought one million dollars in stock one month ago at 2.00 / share its now worth three million ,a great gain in less than a month for everyone who bought low.The City Center shall be finished and be the greatest place on Earth.Kirk, beam me up.


    Joe Bama wrote on April 17, 2009 07:24 PM: OK i'll admit it! I got sidetracked by the cheerleading coach who got fired for posingg nude in Playboy (sidebar on the text version of the story)


    Two Cents wrote on April 17, 2009 03:52 PM: Common Sense wrote on April 17, 2009 06:09 AM:
    Barbarians at the gate.

    What a classic movie! Forgot about that one. Never read the book though I'll put it on my list.


    Greg wrote on April 17, 2009 11:56 AM: Nobody is trying to "force" MGM Mirage into bankruptcy, certainly not in these economic times. If you are looking for a reason, if it were to happen, look to MGM Mirage strategic decision making during the boom, not outside the company. The Lion will be tamed and toned down, but that is "probably" an internal matter for the company. Too bad the employees are not heard by ownership on that item.


    Free Nevada wrote on April 17, 2009 11:09 AM: Here's his blog. More about him here.

    @modasame, some folks that would disagree...


    See you at Coachella.


    are you kidding wrote on April 17, 2009 10:25 AM: Erik - Kerkorian basically is MGM Mirage. Icahn is being stupid do we really need another project to shut down. MGM needs to get this built and then file if need be. At least with City Center open there are jobs to be had, and income to pay off debt.


    Erik wrote on April 17, 2009 08:43 AM: What does Kerkorian have to do with any of this?


    JohnnyD wrote on April 17, 2009 08:28 AM: This should be interesting - Kerkorian vs. Icahn. Let's get the measuring stick out.


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