MGM Mirage May Default on CityCenter Loans

LAS VEGAS (AP) - MGM Mirage Inc., the gambling company of
billionaire investor Kirk Kerkorian, said Tuesday that it may
default on its debt amid development of its biggest casino project
ever, the $8.6 billion CityCenter in Las Vegas.

Unless the economy turns around and more people start gambling
again, the Las Vegas-based casino company believes it will break
its loan agreements this year, it said in a filing with the
Securities and Exchange Commission.

That would mean a default on its senior credit facility, which
it says it has asked to modify.

MGM Mirage will delay filing its annual report until March 17
because it is still assessing its financial position and liquidity
needs, the company said in Tuesday's unscheduled filing. One factor
in the delay, the company reported, was its decision last week to
tap $842 million of its $4.5 billion senior revolving credit
agreement to cover general expenses.

As of the end September 2008, MGM Mirage had $13.29 billion in
long-term debt.

Many U.S. casino companies borrowed huge sums in the last few
years to develop resorts in the United States and abroad. But
several are having trouble making payments on that debt because
their revenue has fallen sharply over the past year as fewer
patrons have spent less money on gambling and services.

Chief executive Jim Murren, who took over late last year, has
said the company is exploring a half-dozen deals around the world
in which MGM Mirage would lend its name and expertise to generate

It sold the Treasure Island casino on the Las Vegas Strip to
Kansas billionaire Phil Ruffin for $775 million and has since been
shopping other properties, including nearly 300 acres of land in
Nevada and Atlantic City, N.J., and two airplanes.

MGM Mirage has not reported on its financial position since
September or posted its earnings for the quarter that ended Dec.

The March 17 report is to include an auditor's assessment of
whether MGM Mirage can continue as a company.

Another casino operator, Las Vegas Sands Corp., faced similar
questions from its auditor in November, but the concerns were
removed after the company raised $2.1 billion in capital by selling
common stock and preferred stock with warrants. In September,
Sands' billionaire founder and CEO Sheldon Adelson and his wife
invested $475 million in the company to help keep its debt

MGM Mirage has said it still needs to raise $1.2 billion to
finish CityCenter on the Las Vegas Strip. The 67-acre complex of
hotels, a casino, condos and retail space has been called the
largest privately financed project in U.S. history. CityCenter is a
joint venture of MGM Mirage and Dubai World subsidiary Infinity
World Development Corp. Dubai World also owns a 9.4 percent stake
in MGM Mirage as a company.

Analyst Robin Farley of UBS Investment Research told investors
on Tuesday that MGM Mirage and Dubai World each need to fund about
$1.3 billion for CityCenter this year.

"MGM had expected to fund their portion with condo sales
proceeds; however, we expect many of the condo sales may not
close," Farley said.

Shares of MGM Mirage dropped 30 cents, 11.5 percent, in trading
after hours Tuesday. It ended the regular trading day at $2.62,
down 43 cents from its previous close, 96 percent below its highest
close in the last year, of $64.73 last March 25.

Between that peak and Tuesday, the 91-year-old Kerkorian's
majority stake in the company shrank in value from $9.6 billion to
$390 million.

Kerkorian's Tracinda Corp., based in Beverly Hills, Calif., also
holds stakes in Ford Motor Co. and Delta Petroleum Corp.

Tracinda sold part of its stake in Ford in October, taking
millions of dollars in losses. Kerkorian, a longtime casino and
hotel developer, has a mixed track record with the other two major
U.S. automakers, including an unsuccessful $4.5 billion cash offer
for Chrysler last year and his push for General Motors Corp. to
form an alliance with Nissan Motor Co. and Renault SA in 2006.

Tracinda also was Chrysler's largest shareholder at the time of
its 1998 combination with Daimler-Benz.

MGM Mirage's profit during the first three quarters of 2008 fell
59 percent compared with the same period in 2007, from $712.21
million to $292.7 million.

Joseph Weinert, senior vice president of casino consulting
business Spectrum Gaming Group in Linwood, N.J., said MGM Mirage's
filing on Tuesday is a sign of the times.

"When you have one of the industry giants walking a financial
tightrope, it really speaks to the state of the whole industry,"
Weinert said. "MGM is a widely respected company both on Wall
street and in the gaming street, and to see a company like that in
the situation it's in, it's a troubling sign for Las Vegas."

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