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MGM Mirage Says Avoiding Collapse Now a Safe Gamble
LAS VEGAS, NEVADA --
The past year has been a year of life on the tightrope with no net for MGM Mirage officials. The casino operator has seen the recession combine with its overleveraging and other circumstances to form a perfect storm of financial disaster. But the company says the worst may be over.
MGM officials said in a filing with regulators Tuesday that it was no longer troubled about its potential to remain a "going concern." Earlier this year, the company had filed a report saying that it may not be viable to continue operating considering its liquidity problems amid the credit crunch.
Using money generated by a $2.6 billion sale of stock and new debt, MGM is able to retire the short-term debt which threatened its existence. Before the cash was raised, doubts existed both without and within the company as to whether it could make payments due this summer and fall.
According to Susquehanna Financial gaming analyst Robert LaFleur, the new report by MGM Mirage is no surprise. He says the gambling company has cash on hand to cover debt service through 2010.
LaFleur says there is still worrisome arrangements ahead for MGM, notably a maturing line of credit in 2011, but there is plenty of time to prepare for that, if company officials have learned any lessons from the past twelve months.
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