Las Vegas Weekly

October 30, 2008 · 10:38 AM

Wall Street follows up on MGM analysis as Venetian/Palazzo sets major announcement

By Robin Leach

Sheldon Adelson.

Photo: Las Vegas Sun

Following the third-quarter earnings conference call to Wall Street by our MGM Mirage officials here, the investment bankers revealed that the “roaring lion” has permanently cut out $225 million in operating costs! Respected analyst Joseph Greff made three key predictions when he noted, “MGM is navigating as well as any casino operator can in a difficult economic environment with limited visibility on casino traffic and spend.”

He said: “We believe that MGM will ultimately succeed in raising new debt capital and will utilize its current credit facility ($1.2 billion available as of 9/30/08) and operating cash flow to fund the balance of CityCenter and refinance near-term debt maturities. Importantly, we do not foresee MGM breaching leverage covenants in 2009. Do we think MGM goes out of business? Nope. Do we see MGM’s earnings multiple expanding meaningfully anytime soon? Nope. And not in this environment where discretionary spend likely gets worse before it gets better. We project that MGM has to contribute another $1 billion to complete the CityCenter project.”

Sadly, though, the bankers all acknowledged that all of next year will remain the largest challenge facing all Strip hotels because of weak overall spend per visitor, casino/hotel capacity growth, impact of airlift reductions on volumes and spend.

Luxe Life has learned that Wall Street bankers and shareholders of Las Vegas Sands will likely receive a special announcement today

(Thursday) about how chairman Sheldon Adelson intends to challenge the incredible drop in his stock price valuations. He will also announce a date to make his third-quarter earnings report and outline specific future financial plans. The Investor Relations office confirmed last night (Wednesday) that such an announcement was being prepared in an attempt to blunt untrue rumors and transparently layout solutions to the economic slowdown that has battered Vegas in recent weeks.

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