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Posted At : March 16, 2009 11:39 AM | Posted By : D McKee
Related Categories:
Stanley Ho,Politics,Steve Wynn
Over the weekend, several quasi-apocalyptic scenarios have arisen vis-a-vis how MGM Mirage could extricate from its enormous debt burden and liquidity crisis. The direst of the lot has the company shopping around two of its top performers -- Bellagio and comparably profitable MGM Grand Detroit -- to prospective acquirers. MGM is trying to dictate sale prices but that may no longer be a viable option.
MGM is at a dire pass if it's really peddling its Strip crown jewel, Bellagio, in order to preserve that X factor (or albatross, as some would have it) that is CityCenter. A ways back on the Vegas Gang, we saw auguries that any and all of MGM might be put on the CityCenter sacrificial altar. I daresay we hoped that day wouldn't come. CityCenter is going to be the company's defining achievement ... but perhaps not in the manner intended.
Several alternate possibilities are marginally less catastrophic and sometimes considerably more convoluted. These include A) simply pledging existing MGM properties as collateral against CityCenter; B) an outright swap of casinos for debt cancellation; C) offloading casino-hotels to third parties who then reimburse bondholders at above-market rates. Third-party buyers wouldn't qualify for the new tax deferral on distressed-debt buybacks, though.
Almost every one of those hypotheticals would accelerate the "unbundling" of the Strip that Steve Wynn predicted last winter. It'd be a buyers' market for healthy mid-cap gaming companies (though even they are struggling) and a bonanza for management companies whose expertise would come in handy for casinos that are in receivership and suddenly rudderless.
What with a seemingly unhinged (but actually Machiavellian) Stanley Ho railing against foreign devils in Macao, perhaps this is the moment for MGM to challenge old Stan to put his money where his mouth is: Buy back MGM's subconcession or loan daughter Pansy Ho the patacas to take the other 50% of MGM Grand Macau private.
After witnessing slow-motion traffic stretching several miles up I-15 from the California border yesterday, I'm prepared to say that the necessity of high-speed rail service to SoCal is beyond debate. Not so Rep. Mike Simpson (R-ID) but at least his "sin express train" japery makes it clear that his agenda is a moral one. It's damn near refreshing to have someone express his opposition honestly, instead of mincing about in fiscal-conservative drag.
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