MGM Mirage, Lenders Agree to Extend $3.6B in Debt
Casino operator MGM Mirage, lenders agree to extend maturity on $3.6B in debt
Casino operator MGM Mirage said Friday it has reached an agreement with lenders to extend the deadline for repaying about $3.6 billion of its debt to February 2014.
The move gives the Las Vegas company a bit more leeway as gamblers visit casinos less often and spend less on each trip. It has nearly $13 billion in outstanding debt.
MGM Mirage owns the most casinos on the Las Vegas Strip and is the world's second-largest gambling company by revenue after Harrah's Entertainment.
The company said the move requires MGM Mirage to repay $820 million to lenders that have agreed to the extension on the $3.6 billion. By October 2011, it must pay another $2.1 billion to lenders that do not agree to an extension.
"This amendment underscores the tremendous confidence our bank group has in our company," MGM Mirage CEO Jim Murren said in a statement. "The transaction provides us with additional long-term financial flexibility and reflects our continued commitment to strengthen our financial position."
MGM Mirage said last week that it lost $433.9 million, or 98 cents per share, during its fiscal fourth quarter, compared with a loss of $1.15 billion a year earlier.
Company executives have said fixing MGM Mirage's balance sheet is a top priority. Before the amendment, $5.55 billion in loans were scheduled to mature in October next year.
Casino industry analyst Bill Lerner of Union Gaming Group called the amendment "critically important" for MGM Mirage, because it would have had a hard time paying lenders back by 2011 without the market recovering in Las Vegas.
Now, earnings levels are comfortably ahead of where lenders need them to be, Lerner said.
"We estimate the company will exceed these levels by nearly 50 percent at both December 2010 and 2011 without the benefit of a strong recovery," he said.
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