November 3, 2010 / 1:02 PM / 9 years ago

UPDATE 3-MGM Resorts says business improving, shares jump

* Q3 loss ex-items 21 cts/shr vs Street view loss 23 cts

* Says Las Vegas market stabilizing

* MGM Macau had record quarter

* Shares rise 7 percent (Adds company comment, analyst comment, updates share price)

By Deena Beasley

LOS ANGELES, Nov 3 (Reuters) - MGM Resorts International (MGM.N), which warned last month that business at its Las Vegas casino-hotels remained soft, reported a narrower loss for the third quarter and said business is picking up speed, sending its shares up 7 percent.

“We continue to see the Las Vegas market stabilizing, Aria’s operating performance is ramping up, and MGM Macau reported a record quarter,” Chairman and Chief Executive Jim Murren said in a statement.

Aria is the casino resort at the company’s flagship $8.5 billion CityCenter on the Las Vegas Strip, a joint venture with Dubai World [DBWLD.UL] that opened last December.

The latest results included another writedown of CityCenter, a high-end complex known for its clean, modern lines rather than the neon and glitter of the Strip. CityCenter has struggled as recession-battered consumers and businesses have cut back on travel and gambling.

So far this year, shares of MGM have gained about 30 percent, compared with a rise of 68 percent for the the Dow Jones U.S. gambling index .DJUSCA.

The company, which aims to cut its heavy debt load, recently raised $1 billion in the equity and debt markets, pushing out its debt maturities to 2013.

“While liquidity risks are minimized, we remain cautious on MGM’s operating performance,” Jefferies and Co analyst David Katz said in a research note.

MGM and Dubai World are also looking to refinance CityCenter’s $1.85 billion debt. “There is lots of interest in a new debt structure at CityCenter,” Murren said on a conference call. “We want to get something done by the end of the year.”

MGM owns 10 Las Vegas Strip resorts as well as casino-resorts in Mississippi and Michigan and joint ventures in New Jersey and China’s Macau.

“I think the Street is still not really confident about a Vegas recovery,” said ITG Investment Research analyst Matthew Jacob. “A company like MGM that relies on Vegas is still viewed as not positioned as well as say Las Vegas Sands (LVS.N), which has Singapore to point to, or even Wynn (Wynn Resorts (WYNN.O)), which is positioned better in Asia.”

Wynn, which is less reliant on its Las Vegas operations and has been fairly pessimistic amid the recession, on Tuesday said it believes the Vegas market has reached a bottom.

MGM’s third-quarter net loss narrowed to $318 million, or 72 cents a share, from $750.4 million, or $1.70 a share, a year earlier.

Excluding one-time items, the loss was 21 cents a share. On that basis, analysts on average were expecting a loss of 23 cents a share, according to Thomson Reuters I/B/E/S.

Net revenue, excluding reimbursed costs, fell 3 percent to $1.5 billion.

“Things may be improving, but probably a little more slowly than investors had been expecting,” Jacob said.

MGM said it is moving forward with acceptance of a bid for its 50 percent stake in the Borgata in Atlantic City, New Jersey, after partner Boyd Gaming Corp (BYD.N) said it is not interested in acquiring the whole property. MGM valued the bid, which sources said came from buyout firm Leonard Green & Partners, at just over $250 million.

MGM said in January that it planned to divest the stake after New Jersey regulators objected to the suitability of Pansy Ho, the company’s partner in a separate venture in Macau.

The company’s Macau joint venture filed last month for an anticipated initial public offering in Hong Kong.

MGM shares were up 78 cents at $11.93 in afternoon trading on the New York Stock Exchange. (Additional reporting by Dhanya Skariachan, editing by Gerald E. McCormick and John Wallace)

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