Wednesday, April 1, 2009

MGM and CityCenter Get Two Week Reprieve From Lenders, Bankruptcy

In an 8-K filed earlier, MGM Mirage announced its CityCenter lenders have agreed to forbear on certain defaults until April 13. In the meantime the company has to find a comprehensive solution or else CityCenter may be forced to file for bankruptcy, with potentially adverse consequences for MGM Mirage itself.

The CityCenter lenders have temporarily waived through April 13, 2009 certain defaults and potential defaults under CityCenter’s senior secured credit facility relating to required sponsor equity capital contributions to CityCenter. The Company intends to work with Dubai World, CityCenter and its lenders, and the Company’s lenders, to obtain necessary waivers or amendments prior to April 13, 2009, and to find a long-term solution for the financing of CityCenter. However, there can be no assurance that any such waiver, amendment or long-term solution will be available or that CityCenter will not determine to seek relief through a filing under the U.S. Bankruptcy Code.
As the company previously announced, on March 27 it had made a $200 million "payment to satisfy the required sponsor equity capital contributions due on or about March 24, 2009. Such funding included $100 million that should have been funded by Dubai World." Also in the 8-K, MGM announced lenders of its own $7 billion credit facilities have blocked any future payments by MGM for CityCenter aside from a $20 million payment to "ensure public health, safety and welfare or regulatory compliance."

Bank lenders have now effectively hijacked management teams to be their puppets as companies tiptoe on the verge of bankruptcy. Sphere: Related Content
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