MGM MIRAGE (MGM) Reports a Q4 Loss; Comments on Current Debt Status

March 17, 2009 5:22 PM EDT

MGM MIRAGE (NYSE: MGM) reports a Q4 loss of $4.15 per share, or earnings of $0.10 ex-items vs. consensus for $0.14 profit. Revenues were $1.62 billion vs. $1.71 billion consensus.

At December 31, 2008, the Company had approximately $13.5 billion of total long-term debt. In late February 2009, the Company borrowed $842 million under its senior credit facility, which amount represented - after giving effect to $93 million in outstanding letters of credit - the total amount of unused borrowing capacity available under its $7.0 billion senior credit facility. In connection with the waiver and amendment discussed above, the Company repaid $300 million under the senior revolving credit facility, which amount is not available for re-borrowing without the consent of the lenders.

The Company was in compliance with its financial covenants under its senior credit facility at December 31, 2008. However, if the recent adverse conditions in the economy in general - and the gaming industry in particular - continue, the Company believes that it will not be in compliance with those financial covenants during 2009. In fact, given these conditions and the recent borrowing under its senior credit facility, the Company does not expect to be in compliance with these financial covenants at March 31, 2009. As a result, on March 17, 2009 the Company obtained an amendment to the senior credit facility, as discussed above, which included a waiver of the requirement to comply with such financial covenants through May 15, 2009. Following expiration of the waiver on May 15, 2009, the Company will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009.

The Company intends to work with its lenders to obtain additional waivers or amendments prior to that time to address future noncompliance with the senior credit facility; however, the Company provided no assurance that it will be able to secure such waivers or amendments. The lenders holding at least a majority of the principal amount under the Company's senior credit facility could, among other actions, accelerate the obligation to repay borrowings under our senior credit facility in such an event of default. As a result of such event of default, under certain circumstances, cross defaults could occur under the Company's indentures and the CityCenter $1.8 billion senior secured credit facility, which could accelerate the obligation to repay amounts outstanding under such indentures and the CityCenter credit facility and could result in termination of the unfunded commitments under the CityCenter credit facility. As a result of the conditions described above, the report of the Company's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008 contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. [SM]

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