MGM extends early participation date for offer

By Steve Green (contact)

Published Friday, Sept. 11, 2009 | 6:20 a.m.

Updated Friday, Sept. 11, 2009 | 10:04 a.m.

With bondholders apparently in no rush to participate in an MGM Mirage debt-exchange deal, the Las Vegas casino-resort company on Friday sweetened the offer.

MGM Mirage extended an offer for a bonus payment to debt-exchangers who agree to the deal by Sept. 24.

On Aug. 27, MGM Mirage announced a plan to swap some of its $782 million in 8.5 percent notes due in 2010 for up to $500 million in 10 percent notes due in 2016.

The exchange offer is being made only to qualified institutional buyers and to certain non-U.S. investors.

MGM Mirage said that for each $1,000 principal amount of existing notes tendered through Sept. 10 and accepted, the holder would receive $1,175 principal amount of new notes. That was to include a $50 bonus for participating by Sept. 10.

Initially, MGM Mirage said that for those tendering after Sept. 10, the offer minus the $50 bonus would be good through Sept. 24.

But on Friday, MGM Mirage extended the deadline for early participation in the deal from Sept. 10 to Sept. 24.

That means all notes tendered and accepted will receive the $50 bonus.

MGM Mirage didn't say why it extended the $50 bonus offer through Sept. 24.

The debt exchange is aimed at improving MGM Mirage's cash position by extending debt maturities, but debt analysts at CreditSights in New York have recommended bondholders reject the exchange.

CreditSights said in an Aug. 28 report that the exchange doesn't address additional debt maturing in 2011.

"Bondholders who are willing to extend their maturities through this exchange would be taking on MGM’s refinancing risk in 2011, and more exposure to the operating risks" CreditSights said in its report. "We would remain bird-in-hand investors and opt to hang on to these notes until maturity."