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MGM Mirage Launches $2.5 Billion Refinance Plan, Floats Bond

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Casino and entertainment giant MGM Mirage was busy on Wednesday with the launching of a multifaceted effort to restructure its short-term debt and reduce the leveraging against its holdings, which include several of Las Vegas�� largest properties. The plans call for the raising of $2.5 billion in investment capital, using an investment by majority shareholder Kirk Kerkorian and a $1.5 billion junk bond with the Bellagio and Mirage casinos as collateral as part of an effort to reduce an overall debt load of approximately $14 billion.

MGM Mirage announced several new initiatives as part of the plan, including the issuance of 81 million new shares of stock and a plan to repurchase $1.05 billion in outstanding debt against the Mandalay Bay resort during 2009. The 91-year-old Kerkorian, whose Tracinda Corp. currently owns 53.8% of MGM Mirage, will purchase 8.1 million shares of the new offering but would still see his overall share of MGM Mirage slide to 43% under the new plan. The additional 81 million shares would swell MGM Mirage��s offerings to roughly 357 outstanding shares.

Initial reactions from Wall Street were negative, with MGM Mirage declining sharply on the day. The stock finished down $3.70 to $8.70 a share, a decline of just under 29.7%. The company has also suffered a lower credit rating recently in the face of its mounting debt. MGM��s bonds surged higher on Wednesday, in contrast to its sliding stock price.

MGM Mirage also continued its restructuring of its financial agreements with Dubai World, with which it shares a major investment in Las Vegas�� ongoing $8.5 billion CityCenter project. Dubai World owns half of the CityCenter project and an additional 10 percent of MGM Mirage��s outstanding stock, prior to today��s announced issuance of new shares. Dubai World, under the terms of the new agreement, received approvals to acquire up to 20 percent more of MGM Mirage��s outstanding shares.

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