[zingbust]

The picture looks much better for City Center/MGM Mirage than a week ago. Colony Capital was interested in partnering up and now suddenly Crown. They only need a couple billion more to finish up, they could always sell one more resort.

[ClarkGrisowld]

Originally Posted by zingbust

The picture looks much better for City Center/MGM Mirage than a week ago. Colony Capital was interested in partnering up and now suddenly Crown. They only need a couple billion more to finish up, they could always sell one more resort.

Sounds like a pipe dream to me. I'm not sure where either is really in a position to come up with the dough and/or take on additional exposure.

As I mentioned (in another thread, I think), the one or two suitors would be foolish to basically bid against themselves.

Buy an equity stake that fails to solve the debt overhang issue with substantial risk of losing all of your investment OR wait for bankruptcy and get in at 60 cents on the dollar.

Same holds for any potential buyers of a property. The real estate market has yet to bottom and you can wait and then buy at firesale prices. I would say MGM has about a 75% chance of filing Chapter 11 within the next 6 months.

[airics]

i think mirage wants to dump the dubai end of it... thats what crown is looking to buy

[olecapt]

Originally Posted by ClarkGrisowld

Sounds like a pipe dream to me. I'm not sure where either is really in a position to come up with the dough and/or take on additional exposure.

As I mentioned (in another thread, I think), the one or two suitors would be foolish to basically bid against themselves.

Buy an equity stake that fails to solve the debt overhang issue with substantial risk of losing all of your investment OR wait for bankruptcy and get in at 60 cents on the dollar.

Same holds for any potential buyers of a property. The real estate market has yet to bottom and you can wait and then buy at firesale prices. I would say MGM has about a 75% chance of filing Chapter 11 within the next 6 months.

No particular reason you could not buy in at 60 cents on the dollar or buy a particular property at the same discount. I would expect anyone putting up the last billion to get an awfully good deal. Bankruptcy carries its own costs.

[atr]

Originally Posted by airics

i think mirage wants to dump the dubai end of it... thats what crown is looking to buy

I thought it was the other way around.

[jfkIII]

Originally Posted by airics

i think mirage wants to dump the dubai end of it... thats what crown is looking to buy

they want Dubai....to go buh-bye?????

[jpk]

Word on the street is that Dubai is in a worse financial situation than even MGM, if you can believe that. Dubai pre-emptively sued MGM and made up some claims when Dubai knew it didn't have the cash to make the latest interest payment. Guess oil being under $50 and a real estate bust in Dubai hasn't been to helpful to their bottom line.

[ClarkGrisowld]

Originally Posted by olecapt

No particular reason you could not buy in at 60 cents on the dollar or buy a particular property at the same discount. I would expect anyone putting up the last billion to get an awfully good deal. Bankruptcy carries its own costs.

Lots of reasons. A fire sale is always cheaper. Dilution of equity is a serious disincentive not to invest. If they subsequently convert some of their debt to equity, you get diluted. Because this doesn't really solve their financial issues, if they go into bankruptcy you could get wiped out.

It may not be financially workable for MGM to even sell properties at 60cents on the dollar. If you are assuming debt, it will increase your cost. If not, it could actually trigger a technical default (ie, if covenants are 5X EBITDA and MGM gets only 4X for a property, they'll be in default).

And Harrah's is arguably in worse shape than MGM. No reason for Crown/Colony Capital to bid against themselves when they could just sit back and pick thru the aftermath. Maybe they will get a great deal, but I suspect Dubai will pony up after a little chest thumping and MGM will try to limp to the finish. I don't think it makes sense for Dubai to give up a sizeable share of its equity for a mere $700M when they've sunk $6B into MGM.

[ClarkGrisowld]

Originally Posted by jpk

Word on the street is that Dubai is in a worse financial situation than even MGM, if you can believe that. Dubai pre-emptively sued MGM and made up some claims when Dubai knew it didn't have the cash to make the latest interest payment. Guess oil being under $50 and a real estate bust in Dubai hasn't been to helpful to their bottom line.

Very possible, but I'd be shocked if Dubai World was bankrupt. They know the financial situation at MGM better than any outsider, and are either cutting their losses expecting MGM to file or trying to pressure them to sell some assets. But selling assets, particularly the cash cows, at fire sale prices might do very little to relieve the debt overhang.

I'm absolutely shocked Colony Capital would be considering such a high risk investment when they are about to get burned on Stations Casinos.

[Fastrudy]

MGM stock is up 32% today.