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May. 20, 2009
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MGM Mirage wraps up $2.6 billion restructuring

Operator announces plans to manage three new Dubai resorts

By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL

MGM Mirage completed its $2.6 billion corporate restructuring effort Tuesday, the same day the company announced it would be involved in a $4 billion project to build and operate smaller, nongaming versions of the Bellagio and MGM Grand in Dubai.

The casino operator's restructuring plan is part of its efforts to help dig the company out from under its debt and leveraging issues.

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    • The Strip casino giant sold 164.7 million shares of the company's stock at $7 a share on the New York Stock Exchange to raise $1.1 billion. The stock sale reflected 143 million shares placed on the open market and more than 21 million shares purchased by the company's underwriters.

    Also, MGM Mirage raised $1.5 billion in the private sale of senior secured notes in which the Bellagio and The Mirage were used as collateral.

    MGM Mirage Chairman and Chief Executive Officer Jim Murren said the deal marked a new beginning for the company, which operates nine Strip resorts and is building the $8.5 billion CityCenter development.

    "We are now well-positioned to continue the work needed to achieve recovery and improve profitability," Murren said.

    Before the deal, MGM Mirage had approximately 276.6 million shares outstanding.

    MGM Mirage closed Tuesday at $8.34, down 40 cents, or 4.58 percent, on the New York Stock Exchange.

    A stock offering by MGM Mirage reduced the majority stake of Los Angeles billionaire Kirk Kerkorian to 39 percent of the company, down from his previous controlling stake of 53.8 percent.

    Through his privately held Tracinda Corp., Kerkorian, 91, who founded MGM Mirage and is a member of the company's board of directors, agreed to purchase 14.3 million shares of the common stock offering at $7 a share.

    Analysts said Kerkorian's reduced holdings shouldn't have any impact on MGM Mirage. He is still considered the one person who has final say in the company's direction.

    "I think historically it's been very important for him to own a majority and I think it takes an extraordinary event to cause him to live with less than 50 percent," KeyBanc gaming analyst Dennis Forst told The Wall Street Journal.

    Forst thought if MGM Mirage shows improved prospects, Kerkorian might try to increase his stake.

    Meanwhile, in Dubai, MGM Mirage said Pearl Dubai will finance construction of a 250-room Bellagio, a 350-room MGM Grand and a 30-suite Skylofts hotel in the Persian Gulf city-state.

    MGM Mirage Hospitality will manage the ventures at the Dubai Pearl, a development near the base of the man-made Palm Jumeirah island.

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

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    Wanda Grahe wrote on May 26, 2009 04:31 PM: I am a shareholder of MGM and feel like someone is tryig to destroy this company -- either Icahn or maybe you should check out Apollo Management who bought out the Harrah Corporation. MGM stock was really coming back -- then someone dug up the Pansy Ho story which will try to close down MGM investments in Atlantic City. And maybe you should also wonder why the President is having his meeting at Caesars Palace tomorrow instead of, perhaps, the Mirage or MGM Grand. Something doesn't make sense. Everytime MGM starts to come back, something happens.


    Let the Slaughter Begin! wrote on May 20, 2009 09:21 AM: MGM Mirage completed its $2.6 billion corporate restructuring effort Tuesday, the same day the company announced it would be involved in a $4 billion project to build and operate smaller, nongaming versions of the Bellagio and MGM Grand in Dubai.

    The Shiek is dead on on this one.

    There are more half finished buildings in Dubai than in Las Vegas right now.

    We do have one thing in common...

    Both of our water supplies are contaminated beyond repair.

    Dubai, which is named after the locust "DABA," is known to devour EVERYTHING in it's path.

    Apparently it considers the MGM Lion a delicacy. Now that it his finished the big chunk in Las Vegas, why not have the rest of the carcass served as dessert on it's home plate? It's like MGM gave them a "doggy bag."

    Good Riddance MGM. They got you ALL IN and you folded on the bluff.

    Thank God they left you that monument to remember them by. The CITYCEMETERY.

    RIP Union Brothers.


    Oscar wrote on May 20, 2009 08:29 AM: Here we have a gaming operator who has been in troubled waters for the past 60 to 90 days trying to restructure their debt and complete finance for the most inefficient over programmed development, which will likely impact every other operator in this town and perhaps run some into bankruptcy and they now have the courage to say that this management plan is the path to achieve recovery and improve profitability... Please, are you kidding me... Where are our regulators? Who is qualifying this business plan to insure solvency?


    MikeyS wrote on May 20, 2009 08:17 AM: When you dance with the devil, you're going to get burned.


    Shiek wrote on May 20, 2009 04:47 AM: Smell a rat with this Dubai announcement.

    On someone insane would invest in Dubai at present.

    Will half finished buildings all over the town such as the exterior skinned only Burj Dubai, why would anyone build in a town where full planes leave and empties arrive.

    There is more to this Dubai announcement than meet the eye. Watch this space.