Will the last person to leave the Strip please turn out the lights? MGM Mirage’s difficulties are another blow for Las Vegas, which saw Strip gaming revenues slump 23 per cent in December.
Worse, spending away from the tables now accounts for three-fifths of Strip turnover, up from two-fifths in 1990, say Citigroup. And visitors have lost the urge to splurge.
This means MGM’s debt burden is rising – estimated at about $14.5bn against its lowly equity value of $550m – as earnings head in the other direction. It could this quarter breach a covenant on its maxed-out senior credit facility. Negotiations with Deutsche Bank to fund the remaining $1.2bn of its vast CityCenter project – a condominium-based scheme conceived at the property bubble’s apex – have reportedly collapsed. Meanwhile, the development consumes about $100m each month.
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