MGM MIRAGE shares jumped nearly 18 percent Monday amid news that the casino company's lenders will let it cover its partner's half of a $70 million payment on a mammoth casino development in Las Vegas and push the payment deadline to Friday.
The payment toward the $8.7 billion CityCenter project MGM MIRAGE is building with Dubai World was due on Monday.
MGM MIRAGE confirmed late Monday that it has successfully delayed and modified the payment by winning the waiver. The deal was reported earlier by The Wall Street Journal and other news outlets, which cited anonymous sources.
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It was not clear whether Dubai World intended to repay its $35 million share. A representative of Dubai World, the Arab state of Dubai's development arm, declined to comment.
Dubai World and MGM MIRAGE, which has been struggling with its nearly $13.5 billion in debt since casino revenue started falling last year, are continuing talks to ensure CityCenter is finished and starts opening on time.
The project on the Las Vegas Strip includes residential, commercial and retail space such as casinos, restaurants and hotels, and is set to start opening later this year.
"We remain committed to finding a long-term solution to the financing of CityCenter, and to that end we continue to work with Dubai World, our lenders and others to ensure completion of this important project," MGM MIRAGE spokesman Alan Feldman said.
Another payment of more than $200 million is due from the partners at the end of April.
MGM MIRAGE earlier repaid its lenders $300 million in exchange for a separate waiver on its debt that extends until May 15 the time when it must certify to its lenders that it is abiding by the loan's overall terms.
Analyst Andrew Zarnett of Deutsche Bank told investors Monday that the casino company likely will have to put up collateral — such as one or more of its casinos — in order to get another waiver from its lenders after May 15.
Zarnett also said MGM MIRAGE needs to raise equity or other capital or sell another casino such as The Mirage in Las Vegas or its 50 percent stake in the Borgata in Atlantic City to fix its balance sheet and stay out of bankruptcy.
Dubai World, which sued MGM MIRAGE last month over statements it has made about MGM MIRAGE's financial condition, is worried that if MGM MIRAGE defaults and is forced into bankruptcy court, then CityCenter too could be forced into bankruptcy.
MGM MIRAGE owes another $494 million toward CityCenter, Zarnett said.