Has MGM Mirage stepped ahead of the game?

11.4.2008 | 8:33 pm | casinos

News that massive casino and entertainment group MGM Mirage has tapped the money markets for over $700 million of additional finance in the last week has received a mixed response from investors around the world. While many believe that the move was forced upon the group, something which may be reflected in the 15% interest rate they were forced to offer, there are some in the industry who believe this is actually a very clever move which could see the group strengthen its position in the industry.

As the casino sector struggles to make ends meet at the moment, and many of the majors such as MGM Mirage have been reduced to junk status in the debt markets, there is a feeling that the next 12 months could well see the collapse of some large companies in the industry. MGM Mirage, although struggling on the financial front like all others in the industry, has now been refinanced for the short to medium term which could see the group pick up some cheap assets over the next 12 months.

Interestingly the company has not withdrawn each and every high profile and high cost project planned for overseas and appears to be looking beyond the current economic climate to a time when consumers will again visit their venues in great numbers. It is this forward thinking and forward planning which could well see MGM Mirage take top spot in industry for the foreseeable future.

Those casino groups which have decided to fight the ongoing slowdown with existing resources may well be forced back to the market over the next 12 months but whether the finance required will be available remains to be seen. The fact that MGM Mirage has already secured this finance for the future is a very interesting move indeed.