MGM Stock

[Steve]

I saw this thread a few days ago but never checked the stock price and history until today. I was stunned by the free fall in price of this stock. I am actually considering taking a small position in MGM. The price is very attractive if you look at MGM's history.

I will want to consider a few more variables before deciding how much to invest, but considering we cannot stay in a recession/depression forever, the price should rise when discretionary income rises. The place to party in the U.S. is still Las Vegas.

Good find MJ.

[PokerNations]

Wow has this stock come down. I bolded the stock price in the article

ReviewJournal.com - Business - SEC FILING: MGM Mirage in talks with lenders

SEC FILING: MGM Mirage in talks with lenders

Company says it will be in default if it can't alter payment structure

MGM Mirage, the Strip's biggest casino operator and the state's largest private employer, could be facing a bankruptcy filing if it can't renegotiate better repayment terms with its lenders covering some $7 billion in loans.

In a filing Tuesday with the Securities and Exchange Commission, the company that operates 10 Strip hotel-casinos and is building the $9.1 billion CityCenter said it was discussing waivers or amendments with its lenders.

MGM Mirage said it would be in default under its senior secured credit facility if it cannot negotiate a better repayment structure. The action could filter down and put all of MGM Mirage's debt, which totals roughly $13.5 billion, into default.

In the filing, the company blamed the recession and the steep drop in consumer spending at casinos for its concerns about not being able to make its debt payments.

"If (MGM Mirage) is unable to negotiate such a waiver or amendment, a majority of the lenders under the senior credit facility could accelerate repayment of borrowings ... cross defaults could be triggered," the company wrote in the SEC document.

Wall Street has begun speculating that MGM Mirage might have to file for Chapter 11 bankruptcy protection to force a restructuring of its bank loans and corporate debt.

MGM Mirage has also been seeking the final $1.2 billion in financing to complete CityCenter, which is scheduled to open in October. The 4,004-room Aria, CityCenter's centerpiece hotel-casino, is scheduled to open in December.

"Many lenders are not being flexible with gaming operators. ... We believe MGM Mirage is going to have significant difficulty in reaching an agreement with its respective banks," Macquarie Securities gaming analyst Joel Simkins told investors. "Unfortunately, in a worst case scenario, should MGM Mirage need to restructure, we believe this tipping event will place another cloud over the sector."

Simkins worried the stock prices of other casino operators, including Wynn Resorts Ltd. and regional casino operators, would suffer. Shares of MGM Mirage sank to a 52-week low of $2.62 on the New York Stock Exchange on Tuesday, down 43 cents, or 14.1 percent.

On Monday, JP Morgan gaming analyst Joe Greff reduced his estimates for MGM Mirage's quarterly revenue and cash flow. He alluded to a potential company restructuring.

"We would not rule out a (bankruptcy) filing as the ultimate, and perhaps only, lever from which MGM Mirage can negotiate with its banks, at least until asset sales are announced," Greff said in a note to investors. "We believe the company is in active discussions with potential buyers of Strip assets to raise capital and had hoped that it would report any progress there with its fourth-quarter results."

In December, MGM Mirage agreed to sell Treasure Island to former New Frontier owner Phil Ruffin for $775 million. The Gaming Control Board is expected to address the matter today.

MGM Mirage spokesman Alan Feldman wouldn't speculate Tuesday about any potential outcomes.

"We're engaged in ongoing discussions with our lenders," Feldman said. "Today's filing doesn't affect CityCenter. It's business as usual. We're focused on providing an unsurpassed experience for every one of our guests."

MGM Mirage notified the SEC it was delaying its year-end report for several weeks. The company said it was still assessing its financial position and liquidity needs because souring economic conditions have impacted MGM Mirage's operating results.

Last week, MGM Mirage borrowed the remaining $842 million from its revolving credit line to pay for general corporate purposes. Feldman said the company now has more than $1 billion in cash on its balance sheet.

Like other casino operators, MGM Mirage has undertaken numerous cost-cutting measures over the past 14 months to bring expenses into line amid sinking revenues and cash flow.

The biggest drain has been CityCenter. The project's Harmon Hotel was scaled back and delayed until 2010.

Dubai World, the investment arm of the Persian Gulf state, invested almost $6 billion in the company in 2007 to acquire half ownership in CityCenter and almost 10 percent of MGM Mirage.

Deutsche Bank gaming analyst Bill Lerner said at an investors conference in New York that MGM Mirage will take a number of steps to shore up its finances before a restructuring. The company has properties in Detroit and Biloxi, Miss., along with several Strip casinos, that could be put on the market. He said MGM Mirage and Dubai World might sell part of CityCenter.

"They could sell a hotel tower or a residential hotel tower to a hotelier," Lerner said, adding the company has enough liquidity to resolve its 2009 and 2010 debt maturities, which total about $2.1 billion.

"(The company) needs to quell concerns that they are going out of business," he said.

[MJ]

Wow I'm glad I didn't jump in.

However, Im starting to see oppurtunity again - the city center could pay off big long term if the project resolves it's issues.

[PokerNations]

The latest on MGM:

MGM mulling breakup to pay looming debts: report

MGM mulling breakup to pay looming debts: report

CHICAGO (Reuters) – MGM Mirage (MGM.N), which has warned it could breach its credit agreements this year if the economy doesn't rebound, may break itself up to lure potential buyers as it races to raise the more than $1.5 billion it owes in bond payments and interest this year, the Wall Street Journal reported on Saturday.

Citing unnamed people "familiar with the matter," the paper said buyers had been "sizing up" several of the casino operator's separate properties, including the Bellagio and the MGM Grand Detroit.

"Basically everything is for sale," the paper quoted one anonymous sources as saying.

MGM has said it is in talks with its bank lenders for a waiver on its loans or to amend the debts' covenants, but said there was no assurance that lenders will agree.

If the company is unable to amend terms or receive a waiver its bank lenders could accelerate repayment of the loans and, under certain circumstances, defaults on its other debt may be triggered, MGM has said.

[Randy Ray]

If you take a look at the actual numbers of the business, MGM's low stock price doesn't seem nearly low enough. Think about it in terms of whether or not you would buy the whole business at that price. You're looking at a company with a market cap of $4.4 billion. At the current stock price, that's what it would cost you to buy the entire business.

How much profit did this business make in the last year? None. In fact, they lost $5.95 per share. Since they have 441 million shares outstanding, that means they lost over $2 billion last year.

Break that down into numbers that are more easily understood by the average businessman on this forum. Suppose you were looking at buying a website from someone. And their asking price is $44,000. When you ask them how much money the website made last year, you explain to them that it lost $22,000 last year. Would you think the site is worth $44,000?

[Randy Ray]

Investing in stocks doesn't happen in a vaccum either. You compare what a stock's potential is compared to the other stocks that are available. Take KO, Coca-Cola, for example. Here's a company with a market cap of $137 billion. Last year they made $13.22 per share in profits, or $26 billion dollars.

Again breaking this down into the perspective of whether or not you'd buy the whole business, you're looking at the rough equivalent of buying a website for $137,000 that earns $26,000 a year. Is that a good deal? Maybe not. But compared to the scenario offered by MGM, it's a helluva lot better a deal.

If you wouldn't buy the entire business at that price, why would you buy a percentage of the business at that price?