Tuesday, August 5, 2008

MGM Mirage Las Vegas gets CityCenter financing

My Personal Photo
This shot am at I15 Interstate Freeway

This shot am at Las Vegas Blvd

MGM Mirage Inc, the world's second-largest casino operator, said on Tuesday it has lined up more than half of current financing needs for its massive CityCenter project on the Las Vegas Strip and its shares rose more than 7 percent. The financing news outweighed a 69 percent decline in MGM's quarterly profit as the slow U.S. economy hit spending in Las Vegas. Other large casino companies have also reported deteriorating quarterly earnings, including Las Vegas Sands Corp and Boyd Gaming Corp, which last week said it would halt construction of its partially built $4.8 billion Strip project called Echelon.
MGM is developing a number of properties, including the CityCenter in Las Vegas and a $5 billion casino in Atlantic City, New Jersey. Last year it opened the MGM Grand Detroit and its first property in Macau, China's gambling haven.

The company last August agreed to sell half of the CityCenter development of hotels, condos and retail outlets to Dubai World, which also plans to acquire a stake of up to 20 percent in MGM itself.

MGM said on Tuesday that it and Dubai World are currently working on $3 billion financing package for CityCenter, with commitments so far totaling $1.65 billion from certain banks.

MGM shares, which had fallen 70 percent since last October, rose $2.24, or 7.2 percent, to $33.24 in late-morning trade on the New York Stock Exchange.

Some analysts, however, are still concerned about CityCenter.

Lehman Brother analyst Felicia Hendrix said in a research note that MGM and Dubai World could be required to fund the balance of CityCenter costs with their own equity.

MGM, which operates resorts including the Bellagio, Mandalay Bay and Circus Circus in Las Vegas, said second-quarter net income fell to $113.1 million, or 40 cents per share, from $360.2 million, or $1.22 per share, a year earlier. The 2007 quarter included $63 million from condominium sales.

The results fell short of the 42 cents a share forecast by analysts, as compiled by Reuters Estimates.

"I think the results were soft, but not as bad as some people were expecting," said Susquehanna Financial analyst Robert LaFleur.

Net non-gambling revenue was flat, while earnings at high-end resorts like Bellagio and Mandalay Bay actually increased from a year earlier.

"This seems to be a concentrated low-end slowdown," LaFleur said.

The earnings miss was driven mostly by weakness at the Borgata resort in Atlantic City, and MGM's Macau casino, UBS Investment analyst Robin Farley said in a research note.

Quarterly revenue fell 2 percent to $1.9 billion, in line with the average analyst estimate of $1.88 billion.

The company's overall gaming revenue fell 4 percent. Slot machine revenue was down 2 percent overall and fell 10 percent on the Las Vegas Strip.

Revenue from MGM's hotel rooms fell 6 percent, with a 5 percent decrease in Las Vegas Strip revenue per available room, the main measure of growth in the hotel industry.
Source: yahoo.com

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