Written by admin on September 8th, 2009
Casino Planning Debt Swap
Las Vegas casino MGM Mirage is in talks to swap up to a half a billion dollars in notes that would allow the company the space it needs to recoup on its heavy debt load.
While the shares in MGM have experience a slight loss in after-hours trading, this does not negate the fact that they have experienced an almost 20% climb over the last three months.
As part of proposed deal, the casino operator would exchange 8.5% in senior notes due next year with $782 million in outstanding principal. It would be swapped for nearly $500 million in 10% senior notes that aren’t due to mature until 2016.
At the beginning of August, the company posted a report showing a second-quarter loss with charges and reduced revenues. Representatives for the casino giant noted at the time that overall demand was still noticeably lower than in the past, yet there are some indications that this could change and business could pick up.
The Mirage has barely managed to comply with its current debt agreements lately, and there is discussion about selling off different properties to help meet payment obligations. Back in May, the casino said it would remit $825.6 million in debt as part of its senior credit facility following a stock and bond offering. The offerings allowed the Mirage to eliminate a bankruptcy concern statement that would have been filed in June. This statement was intended to assure investors and debtors alike about the casino’s capacity to remain operational.
This current exchange offer is set to expire on September 24. With each $1,000 in principal amount that is validly accepted, the holder will be given $1,175 principal amount in new notes. Of these, $50 of the principal will be paid to early participants who tender notes prior to 5 p.m. EDT on the tenth of September. Those who come after the September 10 won’t receive the early participation payment.
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