MGM Mirage gets CityCenter financing

By Deena Beasley

LOS ANGELES (Reuters) - MGM Mirage Inc, the world's second-largest casino operator, said on Tuesday it has lined up more than half of the current financing needs for its massive CityCenter project on the Las Vegas Strip, pushing its shares up nearly 9 percent.

The financing news and strong results at its higher-end resorts outweighed a 69 percent decline in MGM's quarterly profit as the slow U.S. economy hit spending in Las Vegas.

Other large casino companies have also reported deteriorating quarterly earnings, including Las Vegas Sands Corp and Boyd Gaming Corp, which last week said it would halt construction of its partially built $4.8 billion Strip project called Echelon due to credit market problems.

"We believe our market share is growing based on the superior quality of our resorts and premium guest service," Chief Executive Terry Lanni said during a conference call with analysts and investors.

MGM is developing a number of properties, including the $9.1 billion CityCenter and a $5 billion casino in Atlantic City, New Jersey. Last year it opened the MGM Grand Detroit and its first property in Macau, China's gambling haven.

The company last August agreed to sell half of the CityCenter development of hotels, condos and retail outlets to Dubai World, which also plans to acquire a stake of up to 20 percent in MGM itself.

MGM said on Tuesday it and Dubai World expect to finalize a $3 billion financing package for CityCenter this quarter and have so far received commitments from several banks totaling $1.65 billion.

MGM shares, which had fallen 70 percent since last October, were up $2.68, or 8.7 percent, to $33.68 in afternoon trade on the New York Stock Exchange.

The company, which operates resorts including the Bellagio, Mandalay Bay and Circus Circus in Las Vegas, said second-quarter net income fell to $113.1 million, or 40 cents per share, from $360.2 million, or $1.22 per share, a year earlier. The 2007 quarter included $63 million in condominium sales and $264 million from the sale of discontinued operations.

The profit fell short of the 42 cents a share forecast by analysts, as compiled by Reuters Estimates.

"I think the results were soft, but not as bad as some people were expecting," said Susquehanna Financial analyst Robert LaFleur.

Net non-gambling revenue was flat, while earnings at high-end resorts like Bellagio and Mandalay Bay actually increased from a year earlier.

"This seems to be a concentrated low-end slowdown," LaFleur said.

The earnings miss was driven mostly by weakness at the Borgata resort in Atlantic City and MGM's Macau casino, UBS Investment analyst Robin Farley said in a research note.

Quarterly revenue fell 2 percent to $1.9 billion, in line with the average analyst estimate of $1.88 billion.