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StumblePublished Wednesday, Oct. 22, 2008 | 6:42 p.m.
Updated Tuesday, Oct. 28, 2008 | 10:15 a.m.
Those investors who figured MGM Mirage couldn't trade much below $20 a share a few weeks ago got another nasty surprise today, when bond rating agency Fitch Ratings issued an especially bearish outlook on the company.
MGM Mirage serves as a bellwether for the Strip, where it owns 10, or nearly half, of the megaresorts on Las Vegas Boulevard.
MGM Mirage fell 14 percent today, hitting a new low of $12.44 per share. Shares are down nearly 85 percent so far this year.
In other words, it doesn't look like this gaming recession has hit bottom yet.
"MGM's refinancing risk is substantial, as it is still trying to secure additional CityCenter funding, while also needing to refinance $1.28 billion of debt in the next 12 months," Fitch analyst Michael Paladino said.
While that seemed clear a few weeks ago, the report was more telling about bad news to come: The tourism economy continues to deteriorate in Las Vegas, with third quarter trends "notably worse" than than the first two quarters of earnings
reported by the company and future quarters likely to remain weak in Las Vegas, the report said.
Besides its own large cash reserves, MGM Mirage has two not-so-secret weapons to keep it out of restructuring.
This week, billionaire dealmaker Kirk Kerkorian, who owns 54 percent of MGM Mirage through his Tracinda Corp. investment company, sold a stake in Ford Motor Co. and indicated that he might dump all of his Ford shares and reallocate the funds to other industries, including gaming.
While the auto industry is fundamentally troubled, the gaming industry, and especially MGM Mirage, is a strong business going through a rough patch, Kerkorian seems to be saying.
Either Kerkorian or Dubai World, which owns 9.4 percent of MGM Mirage stock and half of the CityCenter joint venture with MGM Mirage, could pony up cash to meet debt obligations, Paladino noted in his report.
My Father always said the Armenians were the smartest business people on the planet.
Mr. K. knows what to do and will for sure do what needs to be done.
An industry built on fleecing people can only endure as long as it takes people to realize they're being fleeced.
I guess it could last forever in our nation (/planet) of idiots.
I just returned from Las Vegas and Primm. Primm Herbst casinos were virtually empty. Las Vegas seemed better, but certainly fewer people than last year or the year before. After this I will play at the Indian casinos. The Las Vegas and Primm machines are horribly tight. What amazes me is the casino mentality. I enjoy playing three card poker, but now the minimums in even some of the cheap places is $5. Too rich for my blood, and apparently many others because most of the tables have very few, is any, players. If they would lower the limit to $2 or $3 they would have more players and increase their profit (my opinion).
Go down town in Las Vegas Butch! They have $2 and $3 Table games! Although, I don't know if they have $2 or $3 Three card poker games?
It's in the best interest of Nevada that gaming and tourism continue to grow.
Keeping gaming strong will keep Nevada strong...
Well blame the oil companies for the lack of tourists - high oil equals expensive airlines flights equals fewer visitors. The greedy tighter casino gaming tricks like 6:5 blackjack doesn't help either.
Treat your customers well and they will return and everyone will be happy.
It's getting very hard to support the "new" vegas. The drink till you puke mentality is overwhelming the psyche of this town. All you had to do was be here a year ago on Nba all-star weekend, That's not the exception anymore, that's the norm.
Las Vegas is a luxury and like every other luxury in a recession, demand goes down. The casino operators will be fine it's the little guys, the hourly tipped employees that are taking a beating.
Vegas just isn't the same. I stayed at the westward-ho 71 times, sometimes 5 times a year, I fly from ohio and its not the airfare that stops people its the trying to cater to the elete, when its the average joe that kept vegas going. We can't aford big condoes or fancy apts.
I want it the way it used to be, when you got some play for your money. Not 500 nickles a play or 10,000 pennys per play. Greenvalley, eastside cannery,TI, Samstown, Slots-a-fun and some of the other casinos still have 4 card and multi-card keno in nickles or pennys. I would much rather play all day than lose it all in an hour. Many days I played for 14 hours at slots-a-fun. The friendly people in these little casinos is what makes them go.
I get free rooms at harrahs but they took out their nickle 4 card keno. Bigger isn't better it just cost more.
Get Back to basics.
I agree bigspender.
Vegas used to be a LOTTA fun.
Cheap rooms, buffets. little looser slots, better rules on BJ, comps, etc.