Tuesday, May 22, 2007

S&P may cut MGM deeper into junk on Tracinda talks (Reuters)

NEW YORK, May 22 (Reuters) - Standard & Poor's on Tuesday said it may cut its ratings on MGM Mirage Inc. (MGM.N: Quote, Profile , Research) after billionaire Kirk Kerkorian's Tracinda Corp. said it will enter talks to buy MGM's Bellagio and its $7.4 billion CityCenter development on the Las Vegas Strip.

Tracinda also said on Monday it is exploring options for its 56 percent stake in MGM. Tracinda said its move could result in a financial restructuring of the remainder of the casino company, which controls roughly a third of the famed Strip with properties such as Luxor, Mandalay Bay and Circus Circus.

S&P said it may cut MGM's corporate credit rating from "BB," two levels below investment grade.

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"In resolving the CreditWatch listing, we will monitor future developments pertaining to these announcements, and respond when we are able to better assess any implications to MGM Mirage's credit profile," S&P said in a statement.

MGM's 7.5 percent bonds due 2016 fell 0.13 cents to 99.375 cents on the dollar, according to MarketAxess.

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