| LAS VEGAS, March 6, 2000
- MGM Grand, Inc. (NYSE: MGG) and Mirage Resorts, Incorporated (NYSE: MIR)
today announced that their respective Boards of Directors have approved
a definitive merger agreement, under which MGM Grand (the �Company�) will
acquire all of the outstanding shares of Mirage Resorts for $21 per share
in cash. The transaction will have a total equity value of approximately
$4.4 billion. In addition, MGM Grand will assume the outstanding debt of
Mirage Resorts of approximately $2.0 billion.
The transaction is subject to the approval of
Mirage shareholders and to the satisfaction of customary closing conditions
contained in the merger agreement, including the receipt of all necessary
regulatory and governmental approvals and is not subject to financing.
The transaction will be accounted for as a purchase; the companies anticipate
the transaction will be completed during the fourth quarter of 2000.
MGM Grand expects that the acquisition will be
accretive to earnings per share immediately, and increasingly accretive
in subsequent years. The Company noted that it has financing commitments
to fund the entire acquisition cost, and is committed to maintaining the
strongest possible balance sheet. Accordingly, MGM Grand contemplates a
capital structure that preserves its investment grade rating, and expects
that combined debt levels will be reduced through free cash flow and the
sale of non-strategic assets.
J. Terrence Lanni, Chairman of MGM Grand, said,
�As a result of this acquisition, MGM Grand will have achieved a dream
combination of assets and people, a combination that creates unquestionably
the premier company in the gaming industry.
This transaction provides Mirage shareholders
with a significant premium for their shares. We strongly believe that the
revenue enhancements and cost reduction opportunities arising out of this
acquisition will create a meaningful increase in the value of MGM Grand
stock.�
Stephen A. Wynn, Chairman, President and Chief
Executive Officer of Mirage Resorts, said, �This extraordinary transaction
fully embraces the value of the franchise created by each of the Mirage
properties and the contribution made by the 32,000 individuals who are
responsible for that franchise.�
MGM Grand expects significant cost savings to
be achieved primarily through increased purchasing power and the avoidance
of duplicate facilities and functions. In addition, substantial revenue
growth is anticipated from the unparalleled array of accommodations, entertainment,
dining, shopping, gaming, and sports and leisure experiences that will
be available to the Company�s customers and guests.
| The acquisition of Mirage
Resorts by MGM Grand marries the most admired assets in the gaming industry.
The Company will own and operate the finest portfolio of 14 resorts including,
in Nevada: MGM Grand - �The City of Entertainment,� Bellagio, Mirage, New
York - New York, Treasure Island, a 50% interest in Monte Carlo, Golden
Nugget - Las Vegas, Whiskey Pete�s, the Primm Valley Resort, Buffalo Bill�s,
and Golden Nugget - Laughlin; in Detroit: MGM Grand Detroit Casino; in
Mississippi: Beau Rivage; and in Australia: MGM Grand Darwin. This stellar
collection of trophy properties, along with the extensive undeveloped acreage
in Nevada, New Jersey, and Mississippi, provides the Company with outstanding
growth opportunities in the future.
MGM Grand, Inc.
is an entertainment, hotel and gaming company headquartered in Las Vegas,
Nevada. MGM Grand, Inc. owns and operates: the MGM Grand Hotel and Casino
- The City of Entertainment and New York - New York Hotel and Casino both
located in Las Vegas; Whiskey Pete�s, Buffalo Bill�s and the Primm Valley
Resort in Primm, Nevada; the MGM Grand Detroit Casino in Detroit, Michigan;
the MGM Grand Hotel and Casino in Darwin, Australia; manages casinos in
Nelspruit, Witbank and Johannesburg, Republic of South Africa; and owns
two championship golf courses at the California/Nevada stateline. MGM Grand
is in the early stages of developing a permanent hotel and casino complex
in Detroit, Michigan. The Company also has announced plans to develop a
hotel and casino resort in Atlantic City, New Jersey.
Mirage Resorts,
Incorporated is a leading owner, developer and operator of casino-based
resorts. Mirage owns and operates five casinos in Nevada: the Bellagio,
Mirage, Treasure Island, Golden Nugget - Las Vegas, Golden Nugget - Laughlin,
and the Beau Rivage casino in Biloxi, Mississippi. Mirage also owns the
Holiday Inn Casino Boardwalk and has a 50% interest in the Monte Carlo
Resort Casino.
. |
DCR Comments on
MGM Grand Acquisition
of Mirage Resorts, Inc.
CHICAGO, March 6, 2000 - Duff Phelps Credit Rating Co.
(DCR) maintains the Rating Watch-Down status on the debt ratings of Mirage
Resorts, Inc. (NYSE: MIR). This rating action affects $950 million of 'BBB'
(Triple-B) rated senior debt securities as well as the commercial paper
rating of 'D-2' (D-Two).
MIR's ratings were originally placed on Rating Watch-Down
on February 23, 2000 following the public disclosure that MGM Grand, Inc.
(NYSE: MGG) had offered to acquire MIR for $5.5 billion, including debt
assumption. While this transaction was subsequently rejected by MIR's board
of directors, the companies announced a definitive agreement to merge this
morning in an all cash transaction valued at roughly $6.4 billion, including
the assumption of MIR`s $2 billion in debt.
While MGG publicly suggests that it contemplates a capital
structure that supports an investment-grade rating, the transaction will
result in an initial debt balance of approximately $7.7 billion, a multiple
of nearly 7 times 1999 pro forma EBITDA (excluding synergies). DCR believes
MGG will need to present a credible plan to rapidly reduce debt levels
through a combination of asset sales, free cash flow and/or an injection
of equity capital to merit an nvestment - grade rating. DCR's examination
of the combined company would include, among other things, a review of
the proposed synergies, the combined company's competitive and financial
position, its financial policies as well as its planned growth initiatives.
Positively, the merged entity will own 14 gaming resorts,
which include some of the most prestigious assets in the industry such
as Bellagio, MGM Grand, Mirage, New York - New York, Treasure Island and
a 50 percent interest in Monte Carlo on the Las Vegas strip. The transaction,
which is expected to close in the fourth quarter, is subject to the approval
of MIR shareholders and to the receipt of all necessary regulatory and
governmental approvals and is not subject to financing.
It should be noted that MIR`s outstanding notes contain
a change of control feature that requires MIR to offer to repurchase the
securities at a price of 101 percent of the principal amount. The offer
must commence within 10 business days following the change of control and
must remain open for at least 20 business days. As a result, noteholders
will have the opportunity to redeem their securities to avoid the potential
of increased credit risk.
Duff Phelps Credit Rating Co.
Steven P. Altman, CPA,
312-368-2090,
[email protected]
http://www.dcrco.com
|
Statements in this release which are not historical
facts are �forward looking� statements and �safe harbor statements� under
the Private Securities Litigation Reform Act of 1995 that involve risks
and/or uncertainties, including risks and/or uncertainties as described
in the Company�s public filings with the Securities and Exchange Commission |
