MGM Mirage revises notes exchange offer

By Steve Green (contact)

Thursday, Sept. 17, 2009 | 8:21 a.m.

With investors generally reluctant to participate in its outstanding note-exchange offer, MGM Mirage today revised the deal again and announced a separate debt-placement arrangement.

The company has been working to improve its liquidity position by extending the dates of debt maturities.

MGM Mirage announced Aug. 27 a plan to trade 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.

As of the close of business Wednesday, only $21 million in principal amount of existing notes had been validly tendered and not withdrawn, which if accepted would be exchanged for about $24.7 million in principal amount of new notes, the company said.

Under an amended plan, MGM Mirage last week said that for each $1,000 principal amount of existing notes tendered through Sept. 24, and accepted, the holder would receive $1,175 principal amount of new notes.

Debt analysts at CreditSights in New York had recommended bondholders reject the exchange, saying it didn't address additional debt maturing in 2011.

MGM Mirage today said it's now capping the debt exchange and, unless the exchange is canceled, plans to issue just $25 million in new notes -- about the amount to be paid for notes tendered through Wednesday.

A new condition is that no less than $25 million of new notes must be issuable for existing notes validly tendered and accepted, MGM Mirage said.

It warned debt-exchangers that with just $25 million in new notes to be issued, the notes will have limited liquidity -- and extended the deadline for those tendering their debt to withdraw their tenders to Sept. 30.

"An issue of securities with a small outstanding principal amount available for trading, or float, generally commands a lower price than does a comparable issue of securities with a greater float. Therefore, the market price for new notes may be adversely affected by the relatively small float. A reduced float may also make the trading prices of new notes more volatile," the company said in a regulatory filing.

MGM Mirage also announced today that it plans to make a private placement of $350 million of senior unsecured notes due 2018. It didn't say what interest rate it intends to pay.

"The company plans to use the net proceeds from the offering to reduce the outstanding borrowings under the company’s senior credit facility and for general corporate purposes," MGM Mirage said.