MGM Mirage told investors Monday morning it had secured most of the remaining $3 billion in financing for its massive CityCenter development.
However, the news, which had been highly anticipated by Wall Street, didn’t help the casino operator’s slumping stock price. During the stock markets’ turbulent Monday, shares of MGM Mirage closed at $19 on the New York Stock Exchange, dipping as low as $17.01 before coming back. MGM Mirage shares were off $2, or 9.52 percent, with almost 10 million shares traded, more than double the average daily volume.
In a statement, the company said it had secured a $1.8 billion senior bank credit facility, which matures in April 2013. The facility is expected to be increased to $3 billion as additional commitments are received. MGM Mirage Chief Financial Officer Dan D’Arrigo said CityCenter, which has a budget of $9.2 billion, has received additional signed commitment letters totaling more than $500 million.
In a filing with the Securities and Exchange Commission, MGM Mirage said it modified several points in the company’s lending agreements.
“Even in the current difficult lending environment, strong well-conceived projects attract financing. CityCenter is such a project,” D’Arrigo said in a statement. “We appreciate the strong support CityCenter has received from these participating financial institutions.”
Although investors sent shares of MGM Mirage and other stocks within the sector on a downward spiral for the third straight trading day, analysts were pleased MGM Mirage alleviated a significant question concerning CityCenter, which is expected to open next year. The development has a 4,000-room hotel-casino centerpiece, boutique hotels, high-rise residential and an entertainment, dining and retail complex.
“On the positive side, these announcements show that the banks are willing to work with MGM Mirage to relieve potential balance sheet pressure,” Goldman Sachs gaming analyst Steven Kent said in a note to investors. “However, the credit facility amendment is also a potential signal that MGM Mirage will likely increase the leverage on its balance sheet and operating conditions remain challenging.”
The stock prices of other casino operators and gaming equipment manufacturers joined MGM Mirage on the roller-coaster ride.
Las Vegas Sands Corp. shares closed at an all-time low of $20.85 on the New York Stock Exchange, down $2.26, or 9.78 percent. Shares fell as low $18.50 during the day. Wynn Resorts Ltd. closed at $67.77 on the Nasdaq National Market, down $2.65, or 3.76 percent. Shares of Wynn Resorts were down to $57.35 at one point Monday.
Shares of Ameristar Casinos fell more than 18 percent on the Nasdaq, Boyd Gaming Corp. was down 10.45 percent on the New York Stock Exchange and Pinnacle Entertainment Inc. shares closed down 9.78 percent.
As for gaming equipment makers, International Game Technology closed at an all-time low of $14.36 on the New York Stock Exchange, down $1.16, or 7.47 percent. Bally Technologies Inc. was off almost 6 percent while WMS Industries Inc. fell 5.75 percent.
Contact reporter Howard Stutz at stutz @reviewjournal.com or 702-477-3871.