MGM Catching Breath, Station Still Gasping

[IMGCAP(1)]LAS VEGAS-MGM Mirage is feeling a bit more stable after recently completing a big capital raise and successfully gaining relief from the financial covenants associated with its senior credit facility. Indeed, the operator of 10 casinos on the Las Vegas Strip said last week it can now fulfill its financial commitments through 2010, including $1.26 billion of permanent repayments of credit facility borrowings and any amounts owed under the CityCenter completion guarantee. Its accountants at Deloitte & Touche now agree, having removed language from its audits questioning the company’s ability to continue as a going concern.

[IMGCAP(2)]The only hurdle now in question, MGM Mirage says, is its ability to redeem its $782 million. 8.5% senior notes maturing in September 2010. Clearing that obstacle depends in part on its operating performance and no downside surprises related to the CityCenter completion guarantee. Should things not go according to plan–entirely possible, if not likely, given the recession–”it may be necessary for us to seek additional financing or explore the sale of non-core assets to satisfy the September 2010 senior note maturity.” In March, MGM Mirage sold Treasure Island to Phil Ruffin for $755 million.

Station Casinos’ future remains up in the air and its $5.7-billion debt load is weighing heavy. The locally headquartered operator of more than a dozen off-Strip casinos hasn’t been making interest payments on its debt and is seeking yet another forbearance agreement to complement the one that has already expired while it awaits word on whether bondholders are amenable to the pre-packaged bankruptcy plan it filed in February.