MGM Mirage seeks fastest path - Tuesday 12th of April 2005
The final chapter in MGM Mirage's $7.9 billion buyout of Mandalay Resort Group begins today when company officials meet with Illinois gaming regulators to formulate a process concerning one of the smaller pieces of the overall transaction.
At issue is Mandalay's 50 percent ownership in the Grand Victoria riverboat in Elgin, a 36,000-square-foot casino about 40 miles northwest of Chicago. Hyatt Hotels owns the other 50 percent of the Grand Victoria.
MGM Mirage had planned to move the ownership into an escrow trust when Illinois didn't have a quorum for its gaming control panel.
But when the governor appointed new members to the board last month, the expected March 31 closing of the transaction was pushed back 90 days to give Illinois authorities a chance to examine the transaction.
MGM Mirage is seeking direction from the Illinois Gaming Board as to which would have a faster conclusion -- moving the boat's interest into an escrow trust, or letting the panel hold a full licensing hearing for the company.
"Illinois rules require two meetings of its gaming control board," said MGM Mirage spokesman Alan Feldman. "We're hoping to get some direction from the panel as to which would be the fastest resolution to this matter."
Feldman said the company would be comfortable with either plan.
John Redmond, president of MGM Grand Resorts, and Bryan Wright, assistant general counsel of MGM Mirage, will meet with the Illinois panel.
MGM Mirage executives have said financing for the buyout is in place, which would include the purchase of $4.8 billion of Mandalay Resort Group stock at $71 a share and assumption of almost $3 billion in company debt.
The merger has already been approved by gaming regulators from Nevada and Mississippi and the Federal Trade Commission. Once completed, MGM Mirage would encompass 28 casinos in five states with 75,000 employees, 95 percent based in Nevada.
MGM Mirage saw another hurdle cleared Wednesday when the Michigan Gaming Control Board took about 75 minutes to unanimously approve Marian Ilitch's bid to buy out her partners in the MotorCity Casino and become sole owner of the venture.
Ilitch, who already owns 25 percent of MotorCity, is paying $525 million for the 53.5 percent stake owned by Mandalay. She also is buying an 11.5 percent stake held by Atwater Entertainment, a group of more than 100 local investors, for $106 million, and the remaining 10 percent from another local investor, Tom Celani, for an undisclosed amount.
MotorCity, one of three Detroit casinos, was sold because MGM Mirage already owns Detroit's MGM Grand Casino, and Michigan law prohibits companies from owning more than one casino in the city.
MotorCity takes in more than $400 million in revenue annually.
The sale is contingent on the completion of MGM Mirage's acquisition of Mandalay. Although it gave its approval to the deal, the Michigan board is expected to further scrutinize the financing and other details in the coming months.
Ilitch told the gaming board Wednesday she didn't plan big changes in MotorCity's management.
"I've been around a pretty long time to know that you don't break up a winning team," she said.
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