MGM Mirage Offers Casinos as Credit Security While CityCenter Construction Continues

LAS VEGAS, NV - As reported by Bloomberg: "MGM Mirage, seeking to modify lending terms on its unsecured debt and avoid default as gambling activity withers, is in talks with banks to pledge casinos
  as loan collateral, a person with knowledge of the discussions said.

The Las Vegas-based casino company, controlled by 91-year- old investor Kirk Kerkorian, said it is also open to selling more assets. Analysts have suggested other options, including handing over a property directly to bondholders to eliminate some debt.

“Talks with our financial partners are ongoing,” MGM Mirage said in an e-mailed response to questions. “We’re evaluating every possible option and, as we’ve said before, we will explore all serious and credible possibilities.”

MGM Mirage, the largest casino owner on the Las Vegas Strip, delayed its annual report on March 3 and said a plunge in earnings may cause a breach of the $7 billion senior credit facility, allowing banks to accelerate payment and trigger defaults. Auditors are likely to include “going concern” language in the filing, due by tomorrow. Such language suggests the risk of bankruptcy.

The company gained leverage in talks with unsecured lenders this month, drawing the last $842 million on the senior credit facility. Without security, banks led by Bank of America Corp. would have no advantage over bondholders divvying up assets in the event of a bankruptcy.

“The banks can accelerate this loan and throw MGM into bankruptcy,” distressed-debt analyst Adam Cohen, founder of Covenant Review, said in an interview. “On the other hand, if you’re a lender maybe that’s not a great result for you because now you’re fighting alongside all the unsecured bondholders..."