Recently in MGM Bankruptcy Watch Category

MGM Bankruptcy Watch P.21

By Philip K. on September 25, 2009 11:09 AM | 2 Comments
Citycenter is set to open in December.  Long siigghhhh.  It's a tremendously wonderful thing that Citycenter is hiring thousands of new workers in these difficult times.  Kudos for that.

The CityCenter casino complex in Las Vegas





















Unfortunately, everyone seems to have the wool pulled over their eyes and think/hope the Citycenter complex can revitalize the Las Vegas market.  (Time)

I'm telling you right now, it won't.

My Economist hat predicts the new development will bring a temporary spike in economic activity in the local area.  Once the novelty of the grand opening wears off, Citycenter will still be susceptible to the larger downward macroeconomic forces.  Any bump in the local block economy will face the greater downward pressure from changes in consumer attitude towards "Vegas Baby".  People are starting to save more money, as measured by the US savings rate, and Vegas partying and gambling are the complete opposite of this trend.

How can new markets be created in a declining market?  Opening more shops and more gambling tables will only serve to cannibalize the profits from the likes of Harrah's and Planet Hollywood.  

I feel bad for the the thousands of people Citycenter recently hired.  They should not count on any job security.  I would not be surprised if there's a round of layoffs for hundreds of people within 6-9 months of the Grand Opening.

If the Las Vegas economy really wants to improve themselves without waiting years for the larger economy to recover, they should focus on other industries.  Just a an idea, but Las Vegas is a giant desert with cheap labor and some minimal level of educated people.  Solar power anyone?

MGM Bankruptcy Watch p.20

By Philip K. on September 1, 2009 8:54 AM | 0 Comments
The MGM Grand over the past weekend just had a birthday pool party for Jon of Jon and Kate plus 8.  (LA Times Blog)

Is this the type of event that MGM wants to be known for?  Really?  Some advertising exec in back office probably thought so.

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MGM Bankruptcy Watch p.19

By Philip K. on August 5, 2009 11:27 AM | 0 Comments
I'm a little bit slow in the updates, but I blame it on being away.  

MGM May Cut Condo Prices to Close Sales.  This is really to address the concerns on p.15 with buyers upset with declining prices.  


So much for the old adage gambling is recession proof.

MGM Wants Me to Call Off the Bankruptcy Watch, p.18

By Philip K. on June 24, 2009 1:14 PM | 0 Comments
In the required disclosures with the SEC, MGM said there was "no longer substantial doubt" that it will be going into bankruptcy.  Shares go up.  (Forbes)

*MGM was able to get an extra billion by diluting its shares.  This money might be able to buy them some time but the long term outlook still remains bleak.  Unless Vegas turns around, it will be forced to extending its bare hands out again.  Instead of the previous 70/30 that they'll go bankrupt, maybe it's more like 40/60 within the next two years.

It's always wise to look at company's statements with a skeptical eye.  Legal puffery is just another way of saying they're misleading statements.

MGM Bankruptcy Watch P.17

By Philip K. on June 19, 2009 12:14 PM | 0 Comments
MGM plans to lend its name brand to a new casino resort in Egypt.  (Fool.com) 
*MGM already has a pyramid shaped casino in Las Vegas, so I don't think they'll be using a mini-pyramid design in Giza.  Perhaps the new resort will be in the shape of an iconic American symbol like a giant McDonald's themed restaurant casino and resort.

Jim Murren says there are no plans to sell any of its Vegas Casinos.  (Bloomberg) 
*Sure Jim.  I'm sure Vegas is due for a quick turnaround.  If you're not desperate on cash to repay your creditors to avoid bankruptcy, you can pay the creditors in casino chips.

MGM Bankruptcy Watch p.16

By Philip K. on June 10, 2009 12:12 PM | 0 Comments
MGM has just acquired some breathing room by selling approximately 3% of it's shares to Malaysian investors.  The extra $100m infusion should allow them to shore up their books.

Perhaps these investors aren't familiar with the fact that Fontainebleau, another incomplete large resort down the strip, is having trouble completing their large hotel and is declaring bankruptcy.

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You know.  They say Asians are the biggest gamblers, and this 100 million gamble is as big as it gets.

MGM Bankruptcy Watch, p.15

By Philip K. on June 3, 2009 11:01 AM | 0 Comments
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The real estate value in Vegas has dropped dramatically but CityCenter has refused to lower prices on it's yet to be complete condo.  The dilemma revolves around the buyers.  Many have put down payments of 20 to 30% on their million dollar plus condos, but the fair market value of their condos have dropped as much as an estimated 75%.  30 to 50% is probably the more likely estimate.  In that situation, most buyers would want to walk away from the deal preferably with their deposit.  

I don't have copies of these exact contracts, so I can't apply any legal analysis.  Something to keep in mind is that these property contracts are enforceable on the moment they're signed. If the condo owners signed any contract along with their easement money, which they probably did,  the landowner can sue for specific performance of the contract.  This assumes that the condos are complete and ready to be delivered by the contract date.  CityCenter is not yet complete.

CityCenter is in a tough bind, because if enough buyers walk away from their contracts then MGM might not have enough capital to finish their condos.  If they can't finish the condos, they'd have to return all of the deposits for failure to deliver the specified property.  If they lower the contract prices, they'd get hit in the gut.

MGM better start looking into its couches and hitting up their rich uncles, because they'd be far better off using borrowed money to complete the condos than have to make concessions to buyers.  The problem is their creditworthiness is already shot.

MGM Bankruptcy Watch p.14

By Philip K. on May 14, 2009 10:15 PM | 0 Comments
Despite the recent bounce in prices, MGM today announced a horrible dilution in shareholder value.  They're issuing an additional $1 billion in shares (Bloomberg). The current market cap is only about $2  billion.  This amounts to sticking it to the remaining MGM shareholders.  Don't let MGM stick anything to you.

MGM Bankruptcy Watch p.13

By Philip K. on May 5, 2009 9:14 AM | 0 Comments
MGM and gaming stocks have been on a tear.  MGM has rallied from this year's low of around $3, when I first started monitoring it, to $12.  

Will I need to call off MGM's Bankruptcy Watch?  Why the sudden jump in prices?  We'll see. 


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MGM Bankruptcy Watch p.12

By Philip K. on May 1, 2009 6:33 PM | 0 Comments
*Gunman robs an MGM property and rides away in a Motorcycle.  (LA Times)  
I think I've seen this in a movie before.

*Greektown MGM gets another bid from PENN. (Freep)

*The finalized deal causes MGM's stock to up ~30%.  (Businessweek)  
This was previously reported here on April 14th, but the finalized deal made the stock go up.  Very unusual, because the market usually absorbs news quickly.  

MGM Bankruptcy Watch p.11

By Philip K. on April 28, 2009 9:38 PM | 0 Comments
The WYNN is expressing interesting in acquiring some of MGM's property.  (LV SUN)

MGM Bankruptcy Watch p.10

By Philip K. on April 25, 2009 2:53 PM | 0 Comments
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Will the Mirage casino be the first on the chopping blocks?  (Fool; NYPOST).  Kerkorian would rather dump the Detroit properties first, but if no one wants to buy them he's going to have to sell a piece of the premium property to raise some cash.  That's cutting into the bone.

Who would want to buy a 'Baltic Avenue' type property like Detroit in these difficult times anyway?  MGM is so desperate for cash to stave off bankruptcy, it just might have to sell off it's 'Green Property' like the Mirage.  To avoid selling the Mirage, MGM eeds to raise cash quick.

You hear that?

That's not the sound of the Mirage Volcano.  It's the sound of MGM slowly imploding from within. KaBoom!

MGM Bankruptcy Watch p.9

By Philip K. on April 21, 2009 7:24 PM | 0 Comments
MGM.jpgCasino revenue at the two MGM locations in Detroit dropped 3% in March.  (Detroit News)

The two Detroit MGM locations aren't exactly the most valuable pieces on the monopoly board.  MGM wants to sell off its weaker properties to meet debt obligations.  Selling off property like Detroit is unlikely to help.  The people that can afford to buy a casino right now are unlikely to pay top dollar.  Anybody can smell the blood coming from MGM.

  • The gambler says the recent MGM rally might make it a good time to sell MGM.
  • The investor would never get caught speculating on individual stocks unless there's something more than a hunch.

MGM Bankruptcy Watch p.8

By Philip K. on April 20, 2009 6:02 AM | 0 Comments
Kerkorian is going to have to put up a fight if he doesn't want Icahn to murder him.  (WSJ)

Best part of the article?  "Mr. Kerkorian holds a stake of about 53% in MGM Mirage that is valued at about $900 million, down from $14.9 billion in late 2007".

How does one's life change from super billionaire to just kind of rich?  No more island shopping.  No more gold plated couches.  No more trips to Thailand.  None of that.  

Despite some rumors that the Icahn plan would involve Kerkorian (Reuters), it's just posturing on the part of Icahn.  Don't fall for this bluff.   This is the biggest poker game Kerkorian has ever played.  If he's smart, he would have planned for this earlier by having senior securities.  I don't think he's not that smart.

MGM Bankruptcy Watch p.7

By Philip K. on April 17, 2009 9:49 AM | 0 Comments
Corporate raider Carl Icahn is pushing to force the company into bankruptcy.  Mr. Icahn has hundreds of millions of dollars in corporate debt (usually bonds).  He wants to force the company into bankruptcy so that he'll be first in the credit line and to wipe out all other shareholder value.  (Marketwatch)

I used to love roller coasters when I was kid.  I can't stand them much know.  I'd probably end up spilling my guts everywhere.  This MGM roller coaster ride is as bad as it gets.  One minute they can't get financing.  Then re-negotiation saves the day.  Then Icahn wants to murder them.

I think I'm nauseous.

MGM Bankruptcy Watch p.6

By Philip K. on April 14, 2009 5:58 AM | 0 Comments
MGM Mirage said late Monday that it has received an amendment of its senior credit facility from banks lending to it. This will allow it to fund the entire current construction cost of its CityCenter project, regardless of whether Dubai World goes ahead with a $35 million investment in the project. The costs total $70 million, due no later than April 17, MGM Mirage said in a statement. The casino operator said it "remains committed to finding a long-term solution to the financing of CityCenter to ensure the completion of this important project.  (Marketwatch)

Well played.  CityCenter will have the necessary financing.  What about you MGM?  CityCenter will be built, but does that mean it will fill to capacity and be a thriving retailer?  Especially where the Miracle Mile Shops are across the street and Caesar's Forum Shops are next door?  And there's a public backlash against going to Vegas?

MGM Bankruptcy Watch p.5

By Philip K. on April 13, 2009 10:23 AM | 0 Comments
MGM.jpgMomentum to save CityCenter.  Dubai World offers plan proposal to save CityCenter.  The "proposal" hasn't been finalized and would only preserve CityCenter in the case of an MGM bankruptcy.  (REUTERS)

The Gambler says Dubai World is on some crazy tilt.  It has thrown so much money into the project, now it's just steaming and trying to recover its loses by doubling down.

The Economist thinks the costs of not finishing CityCenter is outweighed by the benefits.  [What do economists know about running a business anyway?]

The Investor should be careful of MGM stock.  It might have gone up 100% plus in the last month or so, but it's still down 90% from last year.

MGM Bankruptcy Watch p.4

By Philip K. on April 11, 2009 6:25 PM | 0 Comments
You know what would be an awesome idea when your company loses over 90% of shareholder value and your teetering on the brink of bankruptcy?  That's right, CEO pay raise.  Awesome.


MGM CEO Gets $500K Raise

Click to enlarge photo

SUN FILE PHOTO

Jim Murren

Under a new employment contract effective Dec. 1, MGM Mirage Chief Executive Jim Murren will receive a salary increase of $500,000 and will be eligible for additional performance-based cash awards of up to $4.25 million.

Murren's new base salary of $2 million reflects the fact that he took on additional responsibilities when he was appointed to lead the company, MGM Mirage spokesman Alan Feldman said.  (LVSUN)

MGM Bankruptcy Watch p.3

By Philip K. on April 10, 2009 4:53 PM | 0 Comments
MGM is desperately needing cash.  The company will get down on its knees and do everything it can to save itself.  Smart move on the part of Colony Capital in walking away.  BLOOMBERG

The stock has been super hot the past two weeks.  It has doubled from it's $2.40 low in March.  It's been riding the economic wave of "not so sucky economic news".  The big test is whether it can withstand the very real culture shift away from Vegas excess.  Unfortunately for the Vegas casinos, this is an endurance test.

MGM Bankruptcy Watch p.2

By Philip K. on April 9, 2009 11:30 AM | 2 Comments
construction_5.jpg

Look at this POMO piece of trash for MGM's Citycenter.  This is the biggest reason why MGM is hanging by a thread.  The Vegas hubris led to the Towers of Nowhere and this scar of a building.  Good design just works.  This doesn't.  No wonder they're having financing troubles.  
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