Late last Friday, casino giant MGM Mirage (NYSE: MGM) announced that it would provide $200 million to keep its $8.7 billion CityCenter project running.
This move should help resolve a "likely bankruptcy filing." Of the $200 million, $100 million should be provided by Dubai World, which is MGM's partner in the CityCenter joint venture. MGM stated that the funding is "with the authorization of its senior lenders" and satisfies the necessary sponsor equity contributions.
Reportedly, the company still needs $800 million in equity contributions in order to access its $1.8 billion credit facility. In addition, MGM is negotiating with Dubai World, its lender, and others toward a long-term solution to finance the project.
Earlier on Friday shares of MGM were halted on the NYSE on "pending announcement," which highlights some of the technical struggles the stock has undergone this year. In January, the shares were hovering in the $16 region; Friday's halt came when the shares were going for $2.51.
MGM bulls need to face the facts, there aren't too many people running out to the casino to spend discretionary money during the recession. This fact should continue to impact the shares for the upcoming quarters, which should cut into MGM's earnings. All hope is not lost, perhaps a recovery will help the casino giant. I mean, I can't wait to get out there and spend the extra $13 I'm getting in my paycheck from the latest stimulus plan ... and I'm sure that feeling is spreading. Right?
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