MGM Mirage had to obtain an additional waiver from the financial covenants in its senior credit facility in order to fund its portion of the revised CityCenter deal, a deal announced on the same day a related covenant waiver was set to expire. The new waiver, which came at a cost, lasts through June 30.
"We continue to work with our advisers and lenders to reach a long-term restructuring of MGM Mirage's indebtedness and those discussions remain positive and constructive," company chairman/CEO Jim Murren said in a statement. "Our next step will be to finalize our restructuring plans and position MGM Mirage for future growth and success."
In general, the plan is to raise additional cash to hand lenders as part of a debt restructure. Money raising options include sale-leasebacks, joint ventures and new management contracts.
Murren said Thursday that the company's ability to obtain the new waiver "demonstrates the strong support of our lenders, and their belief in the importance of completing CityCenter." In a recent conference call with analysts discussing the situation, Murren said the relationship is unique because the lenders have been with the company for more than a decade and also have been major underwriters of its bonds.
The new waiver was agreed to by lenders in exchange for a $100-million payment on its senior revolving credit facility, money which cannot be re-borrowed without lender consent. In addition, MGM Mirage had to grant lenders security interests in the assets of Gold Strike Tunica and certain undeveloped land on the Las Vegas Strip, subject to requisite gaming and other approvals, to secure debt under the facility in an amount up to $300 million. MGM Grand Detroit, which is a co-borrower under the senior credit facility, has agreed to grant the lenders a security interest in its assets to secure its borrowings under the facility.
"The Company intends to work with its lenders to obtain additional waivers or amendments prior to June 30, 2009 to address future noncompliance with the senior credit facility; however, the Company can provide no assurance that it will be able to secure such waivers or amendments," the company concludes.
If not, lenders' may demand immediate repayment of all outstanding borrowings under the senior credit facility. In addition, there are now provisions governing MGM's senior and senior subordinated notes under which a senior credit default would spark a default under the relevant senior and senior subordinated notes, which would also those holders to also demand immediate repayment and decline to release subsidiary guarantees.
"If the lenders exercise any or all such rights, the Company may determine to seek relief through a filing under the U.S. Bankruptcy Code," the company said.
For previous GlobeSt.com stories on MGM and CityCenter, click on one of the following headlines:
CityCenter Funding No Longer in Question
Deal, Waivers Loom for CityCenter, MGM Mirage
Dubai World Offers Up CityCenter Solution
Crown Ltd. Denies Being in CityCenter Recap Talks
Report: Colony Capital Mulls CityCenter Stake
MGM Mirage Covers Partner's CityCenter Co-Pay
MGM Mirage Calls Dubai World Suit 'Without Merit'
Dubai World Sues Troubled MGM Mirage
MGM Mirage Completes Treasure Island Sale
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