MGM Resorts: We Are Not MGM Studios
NEW YORK (
) --
MGM Resorts
(MGM) - Get Report
doesn't want investors to be confused, so let's all get this clear: It is not affiliated with bankrupt
MGM Studios
.
"MGM Resorts International wants to clarify for investors, customers and vendors, particularly those overseas, that it is not affiliated with MGM Studios," the Las Vegas-based casino company said in a statement.
The statement comes after
Metro-Goldwyn-Mayer reached a deal with billionaire investor Carl Icahn
on Wednesday, regarding its pre-packaged bankruptcy.
MGM Resorts wanted to make it especially clear that this filing has "no impact whatsoever" on the casino firm. This message is especially relevant, given that the company itself, or at least part of it, is believed to be tinkering on the brink of bankruptcy.
The company is still trying to figure out how to handle its $8.4 billion CityCenter property, which has dropped from a $5 billion investment a year ago to about $2.4 billion.
CityCenter holds a $1.8 billion loan coming due in 2011, and the fear is if the company can't restructure the debt, it may have to file for bankruptcy. MGM, of course, has a limited amount of money it can contribute to aid CityCenter," CreditSights analyst Chris Snow, says.
"It's unlikely
CityCenter will meet these debt obligations due in 2011 and 2013. Its only choice is to restructure," Snow says.
According to the Altman Z-Score, which measures several aspects of a company's financial health to forecast the probability of it going bankrupt, MGM Resorts is in real danger.
Of course, the Z-Score has historically to be only 72% accurate in its predictions of bankruptcies, but it is believed that those companies with a score of 1.8 or lower will go bankrupt within two years. In September,
MGM had a score of negative 0.13
.
But MGM, at least, did see some positive signs in its third quarter, reporting
as its writedowns affiliated with the CityCenter property and Borgata casino in Atlantic City, N.J., shrank.
Regardless, MGM Resorts, of course, doesn't want its name affiliated with the movie studio, especially in international markets, as it is in discussions with the Hong Kong exchange to complete an initial public offering of its Macau assets.
--Written by Jeanine Poggi in New York.
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