MGM Mirage, building the largest development on the Strip with partner Dubai World, may write down the value of the $8.5 billion CityCenter project and its condominiums.
Write-downs are "reasonably likely," Las Vegas-based MGM Mirage said Thursday in a regulatory filing. The company said it can’t yet estimate the impairment size on the project, which includes 2,400 condo units, hotels, a casino and mall and is scheduled for completion in December.
The prices of condos may be lowered before construction is completed, according to the filing. The partners, opening CityCenter amid the worst gambling and real estate slump in Las Vegas history, are reappraising units and talking with banks to help buyers who made deposits arrange financing to complete purchases, MGM Mirage Chairman Jim Murren said in July.
The company said Thursday it will issue $350 million of senior unsecured bonds due 2018 in a private placement, after an unsuccessful exchange offer for bonds maturing next year. MGM Mirage, whose largest shareholder is Kirk Kerkorian, sold $2.65 billion of stock and debt in May and restructured some loans to remove the risk of bankruptcy.
MGM Mirage shares rose 90 cents, or 7.3 percent, Thursday to close at $13.30 on the New York Stock Exchange. The shares have declined 3.3 percent this year.
MGM Mirage, the biggest Strip casino operator, and state-owned Dubai World will announce details of the reappraisals in the fall, Murren said in the July interview.
Charges representing its half of any impairments would be recorded in this year’s fourth quarter or the first quarter of 2011, MGM Mirage said Thursday.
MGM Mirage said it will use the proceeds from the $350 million of 2018 bonds to repay some of its senior credit facility and for general corporate purposes.
Most 2010 bondholders rejected an exchange offered since last month, MGM Mirage said Thursday.
Holders of $21 million of $782 million of bonds due next year accepted an offer to exchange the notes for higher interest rates and additional principal as MGM seeks to postpone repayments. The company reduced the offer to $25 million of new notes, from $500 million, and said the exchange will expire Sept. 30.
MGM Mirage had offered holders of the 2010 bonds $1,175 worth of 10 percent senior notes due in 2016, for every $1,000 principal accepted in the exchange.