courts:

MGM Mirage responds to shareholder lawsuit

Tuesday, Aug. 25, 2009 | 2:26 p.m.

MGM Mirage on Tuesday issued its first formal response to an Aug. 19 shareholder lawsuit alleging the company and current and former officers misled shareholders about its financial prospects.

"The company believes that the allegations set forth in the complaint are without merit. The company will vigorously defend against these claims but there can be no assurance that the outcome of the proceedings will not have a material adverse effect on the company," MGM Mirage said in a filing with the Securities and Exchange Commission.

Shareholder Robert Lowinger is seeking class-action status for the lawsuit, filed in U.S. District Court for Nevada. It was filed by three law firms including Coughlin Stoia Geller Rudman & Robbins LLP.

On Aug. 19, multiple law firms around the country announced MGM Mirage was being sued. But court records show the Lowinger suit is the only one that has been filed in the nation's federal courts.

The suit claims shareholders suffered because of a decline in MGM Mirage's stock price because the company and executives made false and misleading statements about the company's financial outlook.

Like other gaming companies, MGM Mirage has been hurt by the recession and earlier this year its auditors expressed concern about its viability because of business trends and its hefty debt obligations.

But MGM Mirage has rebuilt its balance sheet with a stock issuance and other measures; and has finalized financing for the massive $8.5 billion CityCenter complex in Las Vegas; and is no longer considered to be at risk of going into bankruptcy.

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Coughlin Stoia, in the meantime, has been sending this e-mail to shareholders inquiring about the lawsuit:

"Thank you for contacting Coughlin Stoia Geller Rudman & Robbins LLP ("Coughlin Stoia") regarding your losses in the MGM matter. As you know by now, a class action has been commenced in the United States District Court for the District of Nevada on behalf of purchasers of MGM Mirage ("MGM" or the "Company") (NYSE: MGM) common stock between August 2, 2007 and March 5, 2009, inclusive (the Class Period).

"If you are a member of the class, meaning if you purchased the above-referenced stock during the specified Class Period, you need not take any action now. You are automatically included in the class action filed by Coughlin Stoia. Later, if any recovery is obtained, you will have the option of submitting your trading information in order to receive a portion of the recovery you may be entitled to or you may "opt out" of the class.

"Generally, there is no out-of-pocket cost to any class member regardless of the outcome. We primarily work on a contingent fee basis, where we pay all costs and expenses. If we are successful in obtaining a recovery on behalf of class members, we will ask the court to award us fees and expenses from the recovery. The amount of the fee award will depend on a number of factors, including the size of the recovery and the duration and complexity of the litigation.

"To be clear: you need not take any action at this time to participate in the class action filed by Coughlin Stoia.

"Thank you for contacting our firm."

Discussion: 5 comments so far…

By onerare1

8/25/09 at 3:17 p.m.

Suggest removal

Once again, the only winner in this lawsuit will be the lawyers.
By bbrummel

8/25/09 at 3:50 p.m.

Suggest removal

"But MGM Mirage has rebuilt its balance sheet with a stock issuance and other measures; and has finalized financing for the massive $8.5 billion CityCenter complex in Las Vegas; and is no longer considered to be at risk of going into bankruptcy." According to whom? A source citation would nice.

Let's be realistic for a moment. MGM Mirage is still in negative earnings. CityCenter has yet to open and when it does the corporation will begin to hemorrhage from day one. This article fails to put into perspective the fact that CityCenter will have a daily operating cost in the tens of millions of dollars. The math simply does not add up with the current trends in the market. CityCenter opens with a nearly $10 billion price tag. How can they compete with the existing properties on the Strip who are practically giving away their rooms for free and manage to pay the debt let alone meet their daily operating expenses?

Furthermore, to the comment posted above, if executives did in fact make false or misleading statements it is a crime not just an inconvenience to shareholders. Many giant corporations have disappeared off the face of the earth in the wake of such behavior i.e. Worldcom, Enron, etc. These are serious accusations and must be taken seriously. Mismanagement, if indeed there was any, by the largest employer in the state has frightening implications for the future of Las Vegas.

Poor reporting overall on this very serious issue. Frankly the media has been just as much to blame for the current economic crisis as they've been too timid to take on large corporations and take a serious look at their decisions and how they would effect the economy as a whole.
By bbrummel

8/25/09 at 4 p.m.

Suggest removal

To wit:

MGM Mirage turns to loss
By William Spain, MarketWatch

Last Update: 5:13 PM ET Aug 3, 2009

CHICAGO (MarketWatch) -- MGM Mirage stayed in the loss column during the second quarter, as the gambling giant reported Monday it was saddled with massive debts and a further deterioration in visitor traffic and spending on the Las Vegas Strip.

MGM Mirage (MGM) lost $216.2 million, or 60 cents a share, on the period -- a turn from a profit of $113.1 million, or 40 cents a share in the same quarter of 2008. Excluding charges, the company would have lost 15 cents a share.

Sales fell to $1.7 billion from $2.1 billion, a 17% drop as casino revenue slumped 12%.

The average estimate of analysts polled by FactSet Research had been for the company to lose 7 cents a share on revenue of $1.48 billion.

The company's average occupancy level fell to 94% from 97% while average daily rates were down to $111 from $156. Revenue-per-available room for its properties on the Las Vegas Strip plunged to $104 from $151.
By vc

8/25/09 at 4:17 p.m.

Suggest removal

Lawyers for the most part are dispicable characters. They know they will be the only winner and thats all it is suppose to be. They could care less about anyone else.
By rodtig

8/26/09 at 1:59 p.m.

Suggest removal

In this age of the corperate casino What do you expect from them(the casino mgm.) They have spent and spent turned the casinos industry into what is now a joke.They are crying that they are losing money buy the truck loads. Dumping money into projects not needed like City Center In stead of putting the money back into what they already have. What happened to bring the guest back Instead it the industry doesn't care.The days of catering to the guest giving comps keeping them happy has turned into get what we can from who comes and who cares if they come back we will just appeal to the next smuck. You need hundreds of players points to get a comp and you play the tables and you might get gredit and you may not. They treat their employees like a number and it reflects into the service you recieve.Now they have ventured into other countries to work that market and at the sametime they have cut off the tourism from those parts of the world. Then they complain theat tourism is down.Hmmmmm!!! they wonder why.Instead of spending and investing minimal money into bringing guest to Vegas they spend billions on casinos closer to them and kill it for Vegas. What happened to the day when the little guy gambling was important.That is right they are called fleas and not important.So the flea moves on and doesnt return.Stakes are to high and the economy is to soft to keep this trend Hey coperate casino giants take care of what you have clean your casino up there really starting to get run down MGM needs to sell off 80 percent of there properties and use those funds for remodel of what they have and then start going back to old school Vegas that built this city. One thing I will say Benny Binnon and all the original owners of the Vegas casinos new how to draw the people in and keep them comming back Thes new companies have really destroyed this town Remember one thing MGM employees and guest are who make you sucessful and you keep them happy and it will flourish for you Right now 50 percent of your decline in business is you own fault