MGM Mirage, Dubai World say they intend to complete project

Events surrounding financially troubled MGM Mirage are fast becoming the gaming industry’s biggest soap opera.

On Friday, hours after the company made a $70 million equity payment to keep construction work continuing on the massive CityCenter development, word surfaced that MGM Mirage and its feuding joint venture partner, Dubai World, had reached an agreement to complete the $8.7 billion Strip project.

Representatives of both MGM Mirage and Dubai World, however, backed away from saying a deal was complete. Both sides said talks are continuing toward a plan to fund the completion of CityCenter.

“We are having productive conversations with our partners and our lenders,” MGM Mirage spokesman Gordon Absher said.

The CityCenter drama played out a day after it was reported that corporate raider Carl Icahn and private equity firm Oaktree Capital management were buying up millions of dollars in MGM Mirage bonds in an effort to force the casino operator into a bankruptcy filing to restructure the company.

MGM Mirage is facing a May 15 deadline to come up with a restructuring plan for its $13.5 billion in long-term corporate debt.

“MGM Mirage continues in a high-stakes poker game,” KDP Investment Advisors gaming analyst Barbara Cappaert wrote in a research note Friday.

Shares of MGM Mirage, traded on the New York Stock Exchange, opened down almost 18 percent Friday on news of the Icahn maneuver. News of the CityCenter payment sent shares up about 11 percent.

MGM Mirage closed the day at $6.30, up 40 cents, or 6.78 percent. Nearly 55 million shares were traded, more than six times the average daily volume.

MGM Mirage’s equity payment on CityCenter included covering the $35 million portion of the costs owed by Dubai World, the investment arm of the Persian Gulf emirate, which owns 50 percent of the project.

It was the second time CityCenter’s lenders gave MGM Mirage a waiver to cover Dubai World’s share. In March, MGM Mirage made a $200 million equity payment, including the $100 million Dubai World was supposed to fund.

Absher said another equity payment for CityCenter is due at the end of April.

In a statement, MGM Mirage Chairman and Chief Executive Officer Jim Murren said the company is committed to completing the $8.7 billion Strip development.

“MGM Mirage is determined to make CityCenter a success and we continue to review with our partners all options to keep CityCenter fully funded,” Murren said. “We are continuing to engage in constructive discussions with our senior lenders and the CityCenter lending group and we appreciate the support of the involved parties.”

A Dubai World spokesman said the company “welcomes the further confirmation of MGM’s commitment to the CityCenter project signaled by its funding of the payment due today. Meanwhile, we continue to work closely with MGM and lenders to find a solution to ensure CityCenter is completed, which is to the benefit of everyone.”

Icahn’s emergence was another factor for investors to weigh. The Wall Street Journal reported that Icahn, who once owned the Stratosphere, is pushing for an MGM Mirage bankruptcy.

Icahn and Los Angeles-based Oaktree, which owns 42 percent of Cannery Casinos, have separately bought large amounts of MGM Mirage’s corporate bonds, according to sources. One media report placed Icahn’s purchase at $500 million. It’s unclear how much of MGM Mirage’s debt Oaktree has purchased.

A bankruptcy would likely wipe out the value of MGM Mirage’s stock and leave bondholders, like Icahn, first in line to collect. Still, some analysts don’t believe Icahn has the leverage to force MGM Mirage into bankruptcy.

“This is a typical Icahn move. It’s all about making money and he sees opportunity,” said Joe Fath, a gaming analyst for fund manager T. Rowe Price. “I don’t think, however, that he has a lot of leverage. The banks have all the leverage. I don’t think Icahn and Oaktree even have a seat at the table. The banks are the ones holding all the cards.”

The drama, in a way, pits one billionaire, Icahn, against another, 91-year-old billionaire Kirk Kerkorian, MGM Mirage’s majority stockholder. He controls about 53 percent of the company.

Cappaert said Icahn may be trying to force Kerkorian, who has been relatively silent on the company’s financial doings lately, into making a move.

“Icahn and Oaktree do not have a lot of choices as yet. MGM has not defaulted on its notes,” Cappaert told investors. “However, a move into bankruptcy supported by a bondholder group may not be bad for bondholders in general. We suspect the group is looking for equity ownership, which would wipe out current equity holders if bondholders prevail.”

The plan to fund the rest of CityCenter asks lenders to amend the terms of a $1.8 billion loan needed to complete the project, Bloomberg News reported.

MGM Mirage, the biggest casino owner on the Strip, and Dubai World have submitted a proposal to lenders that would secure funding for CityCenter, two people with knowledge of the talks said.

The amendments would fence off CityCenter and protect the project from the possibility of a default by MGM Mirage, three people, who declined to be named, said. The proposal would ensure all the funds needed to complete the project are committed by the partners and its banks, one of the people said.

Under the existing loan agreement, a default by MGM Mirage on the senior credit facility would trigger a default on the CityCenter loan, endangering construction on the unfinished multibillion-dollar development.

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

ad-high_impact_4
Business
A Facebook-branded space inside of Macy’s at the Fashion Show shopping center
A Facebook-branded space inside of Macy’s at the Fashion Show shopping center will showcase 13 small businesses in November and December and seven in January. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
T-Mobile uses ticketing data to plan for event
T-Mobile Executive Director of Arena Operations explains how ticket sales data and demographics help plan staffing, vendors, parking and operations for an event.
Costco opens its doors in southwest Henderson
Costco has opened its fifth Las Vegas-area location near the intersection of St. Rose Parkway and Amigo Street. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas strip mall and office park
The Krausz Cos. and WG Group bought a strip mall and an office park in Las Vegas for nearly $80 million total. They acquired a portion of Tropicana Beltway Center in the southwest valley for $59 million. They also acquired the Westbay office complex in the Las Vegas Medical District. The buyers are former owners of The Gramercy, a once-mothballed mixed-use project in the Las Vegas suburbs. They sold The Gramercy in phases for more than $100 million.
Mario Barth talks about the growth of the tattoo industry
Celebrity tattoo artist and business owner Mario Barth talks about the growth of the tattoo industry at The World of Tattoo industry trade show at Planet Hollywood in Las Vegas
$7.5M Las Vegas pot dispensary opens near Las Vegas Strip
Planet 13, which bills itself as one of the largest dispensaries in the world, opened to the public Thursday. It has entertainment including an interactive floor and floating orbs. (K.M. Cannon/Las Vegas Review-Journal)
Caesars CEO to step down next year
Caesars Entertainment Corp. CEO Mark Frissora will leave the casino company in February. Frissora has been CEO since July 2015. He was named CEO right after Caesars' operating company filed for Chapter 11 bankruptcy protection Caesars Entertainment emerged from bankruptcy protection in October 2017 Before Caesars, Frissora spent seven years as chairman and CEO of Naples, Fla.,-based Hertz He led the consolidation of the rental-car industry through Hertz‘s acquisition of the Dollar Thrifty Automotive Group.
Planet 13 in Las Vegas adds twist to marijuana dispensary look
Planet 13, which bills itself as one of the largest dispensaries in the world, opened to the public Thursday. The dispensary is located near the intersection of Desert Inn Road and Sammy Davis Jr. Drive, near Trump International, in Las Vegas. Planet 13 has plans in the future for a coffee shop, a tasting room for marijuana-infused beer and wine, a lounge for consuming marijuana on site if that is legalized and space for food.
Caesars Entertainment opening 2 resorts in Dubai
Cove Beach will open on Meraas’ Bluewaters Island in Dubai in November and Caesars Palace Bluewaters Dubai and The Residences at Caesars Palace Bluewaters Dubai will open in December. (Caesars Entertainment)
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like