MGM announces debt-exchange plan

LAS VEGAS, Nevada -- MGM Mirage announced a debt-exchange plan Tuesday in which the casino operator will offer up to $845 million in senior secured notes due 2020 in a private placement.

Cash raised in the offering will be used to repay part of the debt outstanding under the company's senior credit facility.

The notes will be secured by a mortgage on MGM Grand.

Last month the company said it had reached a deal with lenders to extend the deadline for paying off about $3.6 billion worth of debt to February 2014.

In all, the MGM Mirage has about $13 billion in long-term debt.

Following the announcement, Moody's Investors Service upgraded their view of MGM Mirage's debt.

"As a result of these actions, MGM's probability of default has declined because the company is expected to have sufficient revolver capacity to meet its 2010 debt maturities and a portion of its 2011 funding needs," Moody's Vice President Peggy Holloway said in a statement. "These near-term challenges include a difficult operating environment in Las Vegas."

Holloway said MGM Mirage still faces a challenge because the company has guaranteed a specific amount of revenue from condominium sales at the $8.5 billion CityCenter development.

The company still has more than $1 billion of scheduled debt maturities in 2011.

Union Gaming Group Principal Bill Lerner said the debt exchange was being done in conjunction with the company's deadline extension to give MGM Mirage more financial breathing room and increase the company's liquidity.

MGM Mirage shares rose 7 cents, or 0.61 percent, Tuesday to close at $11.54 on the New York Stock Exchange.

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