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MGM Casinos To Go Bankrupt?

Written by:
Payton
Published on:
Mar/17/2009
MGM Grand

Despite winning a two month reprieve to restructure debts, auditors raised 'substantial doubt' in whether MGM Mirage could continue operations. MGM Mirage, largest casino owner on the strip, has reported a painful $1.15 billion fourth-quarter loss after writing down properties because of shrinking gambling revenue.

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

Revenue per available room, of rates and occupancy known as Revpar, tumbled 21 percent at MGM Mirage’s Strip properties in the fourth quarter, as occupancy dropped to 85 percent from 93 percent a year earlier, and the company charged on average $31 a night less for rooms in Las Vegas.

Many casinos on the strip are now scrambling to renegotiate loans, as cash dwindles. MGM Talks with Deutsche Bank AG on a loan plan to complete the failed City Center project, collapsed this month according to Bloomberg News.

Despite an up day on the DOW Jones today, the MGM stock continued to slide, settling down .20 to $3.03 per share.

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