MGM Mirage (MGM) Monday, announced that it is seeking amendments to its aggregate $5.55 billion of senior credit facilities which would extend the maturity of a substantial portion of those credit facilities from October 3, 2011 to February 21, 2014. The company has asked its lenders to provide their final approvals of the transaction by February 24, 2010. MGM Mirage Hospitality has entered into management agreements for casino and non-casino resorts throughout the world.
The company indicated that, lenders approving the proposed amendments would receive prepayments aggregating not less than 20% of their outstanding loans and lending commitments, as well as certain additional interest and fees. The prepayments would increase by 1% for each full percentage by which lender participation in the transaction exceeds 80%, to a maximum of 25%, the company revealed.
Dan D'Arrigo, Executive Vice President and Chief Financial Officer of MGM Mirage said, "We are pleased to have received strong initial support from our leading lenders for this proposed transaction, and are now working with the rest of our lender syndicate to achieve maximum participation. These amendments would extend a significant portion of our credit facilities, and enhance our debt maturity profile."
The company stated that the credit facilities would also be re-tranched in a manner which would result in conversion of $1.4 billion of revolving loans and commitments into term loans. The transaction would include covenant and other amendments, and would permit MGM Mirage to issue additional secured indebtedness as permitted under the company's public debt indentures. The company further stated that lenders approving the extension would receive an increase of 100 basis points to their interest rates, as well as amendment and extension fees totaling 75 basis points times their reduced exposures.
MGM Mirage stated that it is currently involved in constructive settlement discussions with the Division of Gaming Enforcement or DGE, which have centered on the company placing its 50% ownership interest in the Borgata Hotel Casino & Spa and related leased land in Atlantic City into a divestiture trust for which MGM Mirage would be the sole economic beneficiary. While no definitive settlement with the DGE has been reached, the company has asked its lenders to consent to the trust arrangement.
Jim Murren, Chairman and Chief Executive Officer said, "We disagree with the New Jersey Division of Gaming Enforcement's recommendation to the Casino Control Commission concerning our Macau partner, but believe pursuing a settlement with the DGE represents the best course of action for our company and its shareholders. We would like to put this matter behind us and move forward with the compelling growth opportunities we have in Macau."
MGM is traded at $11.20 up $0.26 or 2.29% on a volume of 7.060 million shares on the NYSE.
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