MGM Mirage (MGM) announced plans to sell $350 million of
nine-year notes through a private placement, using the proceeds to
repay credit-line borrowings.
Meanwhile, the company slashed the size of its planned debt swap
after investors largely ignored the effort. Now, just $25 million
of new notes will be issued, not the $500 million planned when the
offer was made last month. Then, MGM offered to swap $782 million
in notes due next year for up to $500 million of higher-yielding
notes that mature in 2016.
But investor response has been scant, as just $21 million of
notes were tendered as of Wednesday.
The company, like many in the casino industry, became heavily
indebted this decade, due to takeovers and construction of new
facilities. MGM is set to begin opening its $8.6 billion CityCenter
development in Las Vegas at year's end.
Many companies have been tapping improved investor sentiment to
raise capital through stock and/or debt sales, with numerous firms
putting the proceeds toward paying off near-term leverage. MGM sold
$2.5 billion in stock and debt earlier this year.
MGM shares closed Wednesday at $12.40 and were inactive
premarket. The stock is down 54% the last year the company's
performance has worsened as the recession drags on.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com