What a difference a short time can make in a volatile economy. Months ago the MGM Mirage had billions of dollars of cash at its disposal, supposedly well insulated for the recession. Now they are painting a continuing bleak and gloomy picture. The MGM Mirage tapped last week their remaining $842 million in cash under their $4.5 billion revolving credit line because of the turbulent credit market markets and the “uncertain state of the global economy.”
On Monday the MGM Mirage stock plummeted to an all-time low of about $3 per share, down about 95 percent from a year ago.
Despite agreeing to sell the Treasure Island to former New Frontier owner Phil Ruffin for $775 million in December, the MGM Mirage, the Strip’s biggest casino operator, leading entertainment provider, and Nevada’s largest private employer could be facing a bankruptcy Chapter 11 filing if it can’t renegotiate better payment terms with its lenders covering some $7 billion in their outstanding loans. The MGM Mirage has a little more $1 billion in cash remaining on their balance sheet.
And if MGM Mirage lenders are not flexible in payment restructuring, also at risk is their new $9.1 billion CityCenter project that has a final $1.2 billion payment owed. The project has been planned to open in October, with the 4,004-room Aria, the centerpiece hotel-casino, scheduled to open in December.
Like most other Las Vegas casino operators, MGM Mirage has undertaken numerous cost-cutting and debt restructuring measures over the past year. But, so far, none have brought them the much needed financial relief. Talks on a variety of other debt restructuring schemes continue including selling some of their 10 Strip hotel-casinos, other properties, or, failing that, sell part of their CityCenter project and perhaps negotiate with Dubai World, already a 50 percent owner in the project that has invested almost $6 billion, for Dubai assuming a greater ownership stake.