After losing his shirt, bifocals, and the backup tire of his Jeep Cherokee by assuming that Ford and GM are actually competitive in the global car market, Kirk Kerkorian is allegedly selling one of his prize jewels on the LV strip: the MGM Mirage. While the sale seems a little odd at first, it makes sense when one considers the insatiable money pit that the CityCenter project has become for the nonogenarian. After scrapping wave after wave of amenity at CC (gold plates bidets are out, plywood outhouses are in) and still being over budget by billions of US pesos, the old man has drawn a line in the sand, first by selling Treasure Island and now apparently the Mirage itself. In July 2008 Penn National was left at the altar by Fortress and Centerbridge, but ended up in possesion of the $1.25Bn engagement ring (preferred stock by its cold-feeted PE suitors, which incidentally is now worth a lot more than FIG's market cap), and like any spurned lover vowed to take over the world, or in this case Las Vegas. As CEO Peter Carlino was quoted in a Bloomberg interview in November," We would like to come to Las Vegas, but only under the right circumstances. We do not want to build new here. This is not a place to go spending capital on new construction because it’s too unpredictable, too dangerous and way beyond our risk profile. Coming here will mean finding the right existing property under construction or existing." and "There’s lots of properties we’d love to own in Las Vegas." Like Spearmint Rhino (Ed.)The biggest winners of this would probably be the bondholders of the MGM Mirage $750 Million 13% Secured Notes of 2013, which were issued in the low 90s two months ago and have a 101% Change of Control put clause. The Notes hit a low of 78 in late November around the time the world was coming to an end and Vik Pandit had dropped his pants while soapfishing in Paulson's company. The annualized return on that investment would likely be in the 60% range. As an added bonus, this will likely further infuriate that one guy on the syndication conference call who almost got into a fight with Dan D'Arrigo for reasons unrecalled.
As is a customary when dealing with rumors of this nature, MGM's and Penn's version of the situation ranged from "no comment" to " just rumors".... but we all know better... And hopefully once the rumored sale closes, we get the gold plated bidets back at CityCenter, cause obviously that is all that is stopping all the newly and oldly minted real estate billionaires and Kuwaiti sheiks from taking the G5 for the weekly jaunt to the Spearmint Rhino.
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