MGM Mirage Plans To Repay Debt By Selling $2.5 billion In Stock And Bonds
In an attempt to pay off part of its $14.4 billion long-term debt and avoid going through a bankruptcy reorganization plan, casino operator MGM Mirage announced this morning a restructuring plan to raise $2.5 billion through a sale of stock and bond. The financial plan, announced before the start of the trading day on the New York Stock Exchange, includes raising $1 billion in proceeds from a public stock offering of 81 million shares and a $1.5 billion private placement of senior notes. The company has approximately 276.6 million outstanding shares as of May 5.
Investors are reacting negatively to the news. MGM stock dropped over 16% to just above $10 in morning trading. According to Susquehanna gaming analyst Robert LaFleur, he continues to believe there is not enough equity in the company to justify the current stock price. Never the less, Tracinda Corp., the private investment arm of billionaire Kirk Kerkorian, intends to acquire around 8.1 million shares from underwriters. They presently hold approximately 53.8 percent of MGM Mirage's stock.
In a statement, MGM Mirage stated that a recently revised senior credit agreement will permit the company to permanently waive any potential default from the inclusion of the term "going concern" in its 2008 and 2009 financials. The casino operator also announced a tender offer to pay down debt issued by its Mandalay Bay resort, which matures later in the year. They include debt issued in connection with its Mirage Resorts subsidiary, and a minimum of $750 million of a credit line.
Steve Wilson
- Posted: 2009-05-13
- Last Modified: 2009-05-13 11:01:14
|
