2009-06-25
Financial
MGM shares surge as company says risk has lifted
(United States).- Shares of MGM Mirage surged on Wednesday after the casino operator said last month's amendment to a credit agreement, as well as offerings of stock and notes, have erased doubts about its near-term ability to continue operating.
MGM shares jumped 79 cents, or 13.4 percent, in afternoon trading. The stock has traded between $1.81 and $39.50 during the past 52 weeks. The broader market was also trading higher after a surprise jump in orders for big-ticket manufactured items.
Analysts noted, however, that investors shouldn't be surprised by MGM's news.
"Nothing has changed. It's not like this was a great revelation," said Susquehanna Financial Group analyst Robert LaFleur.
Last month, MGM completed a public offering of 164.5 million common shares at $7 per share, for roughly $1.1 billion in proceeds. MGM also made a private placement of $650 million senior secured notes due May 2014 and $850 million notes due November 2017. In addition, the company amended its credit agreement for a sixth time.
MGM's auditors had issued a going-concern qualification for the company in March, after MGM delayed filing its annual results and said it may default on its debt. A going-concern qualification indicates that the auditors have doubt that a company will continue operating.
Analysts noted, however, that investors shouldn't be surprised by MGM's news.
"Nothing has changed. It's not like this was a great revelation," said Susquehanna Financial Group analyst Robert LaFleur.
Last month, MGM completed a public offering of 164.5 million common shares at $7 per share, for roughly $1.1 billion in proceeds. MGM also made a private placement of $650 million senior secured notes due May 2014 and $850 million notes due November 2017. In addition, the company amended its credit agreement for a sixth time.
MGM's auditors had issued a going-concern qualification for the company in March, after MGM delayed filing its annual results and said it may default on its debt. A going-concern qualification indicates that the auditors have doubt that a company will continue operating.
Source: Forbes
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