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MGM Mirage says auditors question its ability to stay in business

The Las Vegas casino operator also reports a $1.15-billion loss in its latest quarter as it wins a two-month bank reprieve to restructure its debts.

March 18, 2009|Bloomberg News

MGM Mirage, the Las Vegas casino operator controlled by billionaire Kirk Kerkorian, said auditors questioned its ability to stay in business as it won a two-month bank reprieve to restructure its debts.

Auditors raised "substantial doubt" about MGM Mirage's ability to continue, the largest casino owner on the Strip said Tuesday in a regulatory filing. The company also reported a $1.15-billion fourth-quarter loss after writing down properties because of shrinking gambling revenue.

The auditors' comments increase the likelihood that MGM Mirage will seek bankruptcy protection. Banks granted waivers on the $7-billion bank-loan facility until May 15. The company said March 3 that it was in talks to avert a potential breach of covenants.

In exchange for the temporary covenant waivers, MGM Mirage is prohibited from prepaying or repurchasing other long-term debt or selling assets. The company will also repay $300 million of the fully drawn revolving loan, and it accepted a 100-basis-point increase in the interest rate.

MGM Mirage can also fund construction of its Las Vegas CityCenter project only if partner Dubai World also finances its half of the costs, the company said in the filing. The casino company reiterated Tuesday that it would finish the project on schedule.

Its fourth-quarter loss was $4.15 a share and compared with earnings of $872.2 million, or $2.85 a share, a year earlier. Revenue fell 16% to $1.62 billion, missing the $1.71-billion average estimate of analysts in a Bloomberg survey.

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