UPDATE 4-MGM Mirage posts 3rd-qtr loss, shares rise

By Deena Beasley LOS ANGELES, Nov 5 (Reuters) - MGM Mirage posted a third-quarter loss on Thursday as consumers spent less at its Las Vegas resorts and it wrote down the value of its latest casino project, but the results were better than expected and shares rose nearly 2 percent. The No. 2 casino operator, which has come close to defaulting on its debt, also amended its credit facility, allowing it to raise up to $1 billion of unsecured debt as long as half of the proceeds above $250 million are used to reduce existing senior debt. "What this amendment accomplishes is bringing our facility back to the type of terms that we've always had with our banks," Chief Executive Jim Murren said on a conference call with analysts and investors. MGM, whose largest shareholder, Kirk Kerkorian, has said he may cut his stake, reported a net loss of $750.4 million, or $1.70 a share, compared with year-earlier net income of $61.3 million, or 22 cents a share. Charges totaled $1.72 a share, including a writedown of the $8.5 billion CityCenter project, a joint venture with Dubai World which is set to open on the Las Vegas Strip in December. Excluding one-time items, the company earned 1 cent per share, well ahead of the 8-cent-per-share loss forecast by analysts, as compiled by Thomson Reuters I/B/E/S. "They did a little better than people had expected," said KeyBanc Capital Markets analyst Dennis Forst. "But the focus is on CityCenter and a turnaround in the economy." He said MGM's gaming results were ahead of expectations, "but everything else still indicates that business is quite difficult." Las Vegas hotel occupancy was flat but rates fell 23 percent. Slot machine volume fell 6 percent, but that was an improvement from the 11 percent year-over-year drop seen in the second quarter. "A recovery in convention and business travel is key to increasing rates," CEO Murren said. "And based on early bookings it looks to us like that is achievable in the second half of 2010 and throughout 2011." He said the company's revenue per available room in Las Vegas will begin to increase year-over-year in either the second or third quarter of next year and will be positive for full-year 2010. MGM's quarterly revenue, adjusted for promotional allowances, fell 14 percent to $1.53 billion but beat the $1.47 billion forecast by analysts. "MGM reported generally solid third quarter results on lowered expectations," Goldman Sachs analyst Steven Kent said in a research note. "We remain cautious on Las Vegas' operating trends heading into a 10 percent supply increase starting next month with CityCenter." Murren said MGM intends to leverage CityCenter and increase its share of the Las Vegas market. With extra business from the new property, he projected a table game market share in the low 40s over the next couple of years, compared with the current level of around 35 percent. For slots, he expects MGM's share to rise to the mid-30s from the current 30 percent. The company's credit amendment also allows it to raise equity, provided that half of the proceeds above $500 million are used to reduce senior debt, but Murren said MGM has "no plans in the foreseeable future to issue equity in any form." Shares of MGM, whose holdings include nine Las Vegas Strip casino-hotels, gambling resorts in Mississippi and Michigan, and joint ventures in New Jersey and China's Macau, were up 18 cents at $9.50 on the New York Stock Exchange. (Additional reporting by Karen Jacobs in Atlanta; editing by Derek Caney, Dave Zimmerman and Matthew Lewis) Keywords: MGMMIRAGE/ ([e-mail]; + 1 213-955-6746) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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