MGM Mirage had $13.5 billion in debt as of the start of the year. Just prior to the end of the year it agreed to sell Treasure Island to Phil Ruffin for $775 million in a deal expected to close in the next couple of weeks. In January, it delayed the Harmon Hotel component of its massive Citycenter development and killed the 200-unit condo portion of that project. In Late February, it maxed out its senior credit facility by drawing down an additional $842 million.

In order to gain the 60-day reprieve from its debt covenants, from March 17 to May 15, MGM Mirage says it had to pay down the senior credit facility by $300-million and may not re-borrow the money without lender consent. In addition, the interest rate on the outstanding debt was increased by 100 basis points and the company is now prohibited through the end of the waiver from prepaying or repurchasing outstanding long-term debt or disposing of material assets without lender consent.

On a conference call with analysts MGM Mirage executives said its relationship with its senior lenders is unique in that they have been with the company for more than a decade and also have been major underwriters of its bonds, and that the 60-day reprieve was exactly what the company was seeking. Returning some of the senior credit facility money and paying more in fees was the right way to go, executives said, because neither the company nor the senior lenders felt it was a good idea to grant collateral for the waiver at this time. As a result, the company now has a couple of months to work out a global solution.

"Asset sales are likely to be part of the solution….," one of the executives told analysts on the conference call. Executives stopped short of naming specific assets but did say "extraordinary interest" has been expressed in its portfolio, both individually and in some cases collectively, and that it is sifting through offers with its consultant, Evercore, and its senior lenders. With billionaire Kirk Kerkorian owning a majority of outstanding shares, he and he alone can determine the outcome of matters submitted to shareholders, such as significant asset sales.

As for Citycenter, executives said the massive development on the Las Vegas will open in stages between October and December 16, when the 4,000-room Aria hotel-casino is scheduled to open. Executives said the 500,000-square-foot Crystals retail component will be between 65% and 70% booked by the time it opens and that of the $1.6 billion in contracted sales it expects to close on at least 75% of that total, despite financing for condo-hotel room purchases not being available at this time.