MGM reveals debt-paying plan and gets bid for stake in Borgata

In a slew of post-market-closing announcements Tuesday, MGM Resorts International announced steps it was taking to address the $13 billion in long-term debt that has been casting a pall on the casino operator’s future.

MGM Resorts also said it received an offer for its 50 percent ownership of Borgata, the company’s Atlantic City hotel-casino. MGM Resorts said the offer was for "slightly in excess of $250 million." The deal was submitted to Boyd Gaming Corp., which owns the other half of Borgata and has the right of first refusal to match the proposal.

The Strip casino giant said it plans to put 40.9 million additional shares of the company’s common stock on the open market, using the net proceeds from the sale to pay down debt. If the stock sale succeeds, the casino operator could raise anywhere from $550 million to more than $600 million, based on current prices.

Shares of MGM Resorts, traded on the New York Stock Exchange, closed Tuesday at $13.61, up 13 cents or 0.96 percent. In after-hours trading, the company’s shares fell 81 cents, or 5.95 percent, to reach $12.80 by 5 p.m. PDT.

In an effort to enhance the offering’s prospects, Los Angeles billionaire Kirk Kerkorian, the company’s founder and largest shareholder, put almost 27.8 million shares of his holdings in the company on the market. The 93-year-old Kerkorian holds about 163.1 million shares of MGM Resorts, or 37 percent of the company, through Tracinda, his privately held investment arm.

If successful, the sale could reduce Kerkorian’s holdings to about 30 percent.

In a statement released through Tracinda, Kerkorian said he "believes that there is substantial value in the assets of the company and that MGM Resorts is a good long-term investment." Tracinda also said it is not planning "other strategic alternatives" with respect to its investment in MGM Resorts.

MGM Resorts did not name the potential buyer for its stake in the Borgata. The offer was substantially less than the $400 million to $500 million that gaming analysts had expected the company to fetch for its ownership in Atlantic City’s largest hotel-casino.

MGM Resorts officials could not comment on the announcements because of Securities and Exchange Commission rules covering the stock offering.

Earlier this month, MGM Resorts Chairman and Chief Executive Officer Jim Murren said paying down debt was the primary focus of company management and that different methods were being explored.

On Monday, Hudson Securities gaming analyst Robert LaFleur said the company’s 15 percent stock-price increase Friday was due solely to the 21.1 percent jump in Strip gaming revenues during August.

LaFleur said MGM Resorts needed to take steps to address its liquidity concerns.

"Given MGM’s lingering balance sheet challenges, we find it hard to imagine a scenario where the shares stage a sustainable and meaningful breakout from these levels," LaFleur said. "MGM can’t deleverage by selling assets as none of its assets are likely to fetch (the necessary) transaction multiples."

Because of the quiet period, MGM Resorts preannounced the company’s results for the third quarter that ended Sept. 30.

The casino operator said it expects to announce a loss of $206 million, or 72 cents per share, which compares with a net loss of $963 million, or $1.70 per share, in the same quarter a year ago.

Pretax impairment charges affected results in both quarters.

The current-quarter results include expected pretax impairment charges totaling $357 million related to the company’s investment in CityCenter, a pretax charge of $46 million related to impairment of CityCenter’s residential real estate inventory, and an impairment charge of $128 million related to the company’s Borgata investment.

MGM Resorts said its net revenue in the quarter is expected to be approximately $1.47 billion, a 3 percent decrease from the same quarter of 2009.

The company said it expects CityCenter to report net revenues of $413 million in the third quarter, including $166 million related to residential operations.

Aria, the development’s centerpiece hotel-casino, expects to show net revenues of $219 million and cash flow of $41 million. Aria’s hotel occupancy was 82 percent during the quarter and its average daily room rate was $175.

The company is also planning to raise money through an initial public offering in Hong Kong in which shares of the MGM Grand Macau would be placed on the open market.

MGM Resorts also said Tuesday that it expects to receive approximately $125 million from MGM Macau during October from the loan to the property. In the third quarter, MGM Macau is expected to earn operating income of $61 million compared with operating income of $50 million in the 2009 third quarter.

The potential Borgata transaction comes roughly seven months after MGM Resorts announced plans to divest the company of its holdings in Atlantic City. New Jersey casino authorities said Hong Kong businesswoman Pansy Ho, the company’s joint venture partner in Macau, was unsuitable.

In a statement Tuesday, MGM Resorts said Borgata, which had been valued at $1.35 billion, led to the pretax impairment change.

Boyd Gaming, which operates Borgata for the joint venture with MGM Resorts, has about a month to decide whether it wants to match the offer and take 100 percent ownership of the hotel-casino, or take on a new partner.

A Boyd Gaming spokesman declined comment on the announcement.

Any transaction would need New Jersey gaming regulatory approval.

In July, MGM Resorts sold the land underneath the Borgata for $73 million in a deal that will deliver net proceeds of $71 million. That deal is expected to close by year’s end.

Contact reporter Howard Stutz at or 702-477-3871.

MGM Grand Plans To Add Retail And Dining To Its Strip Facade
MGM Grand President and Chief Operating Officer Scott Sibella said executives are “discussing redeveloping that entire frontage of the building out to the Las Vegas Strip.” (Todd Prince/Las Vegas Review-Journal)
Boyd Gaming planning new corporate campus
Casino operator Boyd Gaming Corp. has filed plans to build a new corporate campus. The plans call for two 10-story office buildings and a six-level parking garage in the southwest Las Vegas Valley. Boyd Gaming operates The Orleans, the Suncoast, downtown's California Hotel and other properties. The new headquarters would be just a mile from its current main office building.
Bellagio Conservatory transformed to celebrate Year of the Pig
The Bellagio Conservatory Team transformed the 14,000 square foot conservatory to commemorate Chinese New Year, the holiday that marks the end of the coldest days of winter. (Rachel Aston/Las Vegas Review-Journal)
CES 2019: Intro uses sound to connect people
Intro, a startup that is part of the Future Worlds Accelerator in the UK, has an app that uses ultrasonic sound to find people and companies nearby.
CES 2019 Video: CES wraps up another year
Time-lapse video of the action at CES 2019 in Las Vegas. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Create your own beauty products
Beauty Mix by BeautyByMe is a product that lets you create your own cosmetics and beauty products. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Picobrew’s home brew machine
Picobrew brings automation to homebrewing. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Surviving CES
What it's like to spend four days working the mammoth tech convention. (Jason Bracelin/Las Vegas Review-Journal)
Haier’s smart home
Haier presented smart home technology at CES 2019.
CES 2019 VIDEO: Foldimate makes laundry day easy
Foldimate has created a machine that will fold your laundry for you. Just feed it anything you need folded and it will do the rest. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Opte device corrects skin spots
Opte from Proctor and Gamble is a device for correcting spots and freckles from skin. It analyzes the area for spots and then covers them with a serum of matching skin tone. (Mat Luschek/Las Vegas Review-Journal)
Circa hotel-casino in downtown Las Vegas unveiled
Derek Stevens reveals Circa hotel-casino in downtown Las Vegas. He plans open by the end of 2020. (K.M Cannon/Las Vegas Review-Journal)
Circa, new casino coming to Fremont Street
Casino owner Derek Stevens announces his new property Circa, coming to Fremont Street in downtown Las Vegas in late 2020. (Michael Quine/Las Vegas Review-Journal)
Dreenk My Oeno makes wine suggestions
At CES 2019 in Las Vegas, the Dreenk My Oeno tells you all about wine.
Polaroid One Step Plus camera unveiled at CES 2019
Polaroid has moved into the digital age with its One Step Plus camera with Bluetooth. With the connected app, it turns your smartphone into a remote for the camera, along with filters and features.
Amazon is everywhere at CES 2019 in Las Vegas
Seemingly everything works with Amazon Alexa
LG Smart Mirror helps you dress snazzy
LG’s Smart Mirror is less of a mirror but more of an assistant to help get you looking snazzy. It takes your image and recommends clothes for you or matches existing clothes with new clothes, which can be purchased right from the mirror. (Mat Luschek/Las Vegas Review-Journal)
Underwater robots make waves at CES 2019 in Las Vegas
Robosea is a company dedicated to underwater robotics. They produce consumer robots for underwater filming as well as commercial products which can be used for underwater research. (Mat Luschek/Las Vegas Review-Journal)
CES 2019 - Victrola record players spin in Las Vegas
A new spin on an old favorite, Victrola record players are meeting a demand for retro products. The brand is also making furnitures with built-in speakers.
CES 2019: Slamtec robots ready to serve
Slamtec is a robotics company out of China whose goal is to provide solutions for laser localization mapping and navigation. They have created two autonomous robots that can be used in areas such as bars, restaurants and malls. (Mat Luschek/Las Vegas Review-Journal)
Mixologiq drink maker appears at CES 2019 in Las Vegas.
This is the Mixologiq drink maker.
CES 2019: Veritable smart garden
Let’s face it; not all of us have green thumbs. And herbs are particularly difficult to grow, considering their constant need for sunshine. Enter the Veritable smart garden from Exky, which does it all for you. (Heidi Knapp Rinella/Las Vegas Review-Journal)
Bonnie Springs Ranch near Las Vegas being sold to developer
Bonnie Springs Ranch near Las Vegas is being sold to a developer, set to close in March. Bonnie Springs, west of Las Vegas off State Route 159 — next to Spring Mountain Ranch State Park — spans more than 60 acres and was on the market for $31 million. The developer and his project partner are under contract to buy the ranch and plan to chop it up mostly into custom-home lots. The plans includes a 25-room motel, a restaurant and a 5,400-square-foot event barn.
Bone-conduction headphones form Aftershokz
Aftershokz offers bone-conduction headphones - headphones that don’t go in the ear.
CES Happy Hour party at Hangover Suite at Caesars Palace
Conventioneers mingled during the Hardware Massive CES 2019 Happy Hour Bash at The Hangover Suite at Caesars Palace in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Autonomous Cars and Futuristic Aircraft Rule CES
Day two of CES was dominated by autonomous cars and futuristic aircraft in the North Hall of the Las Vegas Convention Center.
TekNekSavr fights neck problems caused by smart phones
Atiya Syverson invented the TekNekSavr to help fight neck and head problems caused by strains while typing on smart phones. (Mat Luschek/Las Vegas Review-Journal)
New eyeglasses know if you fall and call for help
The French company Abeye has created eye glasses that will detect if the wearer falls and call for help. (Mat Luschek/Las Vegas Review-Journal)
Company that creates vibrator-like device claims genders bias against CES
Lora DiCarlo is a women-run start-up that creates a vibrator-like device designed for female pleasure called the Osé. This year they were awarded the CES Innovation Award in the Robotics and Drone Category, but a month later the Consumer Technology Association, which runs CES, rescinded the award and their booth. Haddock and her team believe it is a reflection of gender bias and sexism in an industry with a long history of male domination.
CES-Wagz has new pet products
Wagz has three new products to help create better lives for your pets in a digital world. One is a collar with LTE tracking and an HD camera. Also a smart pet door that only lets your pet in and out. Lastly, a device to humanely keep Fluffy out of certain areas of your home. (Mat Luschek/Las Vegas Review-Journal)
News Headlines
Home Front Page Footer Listing
You May Like

You May Like