MGM Resorts
A tad more than $13 billion of long-term debt was on MGM's balance sheet at the end of the quarter, much of it because of the ill-timed CityCenter project. At a time when Wynn and Las Vegas Sands have been reducing leverage by paying down debt, MGM has been in a holding pattern as results in Las Vegas continue to struggle.
Company |
2Q 2010 Long-Term Debt |
2Q 2009 Long-Term Debt |
Change in Debt |
---|---|---|---|
MGM Resorts |
$13.05 billion |
$12.98 billion |
0.5% |
Las Vegas Sands |
$9.83 billion |
$10.64 billion |
(7.6%) |
Wynn Resorts |
$3.23 billion |
$4.12 billion |
(21.6%) |
Source: SEC filings.
The foundation of problems at MGM were laid years ago when it focused on finishing City Center in Las Vegas while Las Vegas Sands, Wynn and Melco Crown
Last year MGM sold Treasure Island and is attempting to sell its stake in Borgata Resort & Casino in Atlantic City to please state regulators. If MGM keeps selling, eventually there will be no properties left to generate cash and pay for the debt piling up. The Macau IPO is expected to raise up to $500 million, a drop in a $13 billion bucket for MGM.
In coming quarters, MGM Resorts has a lot to prove to investors by reducing debt and getting Las Vegas operations back on solid footing. Count me as a skeptic staying far away from MGM's shares until I see a lot of improvement.
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