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MGM Mirage backers mull debt-for-equity

MGM Mirage backers mull debt-for-equity
The MGM Grand Hotel and Casino, pictured on April 3, 2009, hosted the 44th Annual Academy of Country Music Awards on Sunday, April 5, in Las Vegas. (UPI Photo/Kevin Dietsch) | License Photo

LAS VEGAS, April 18 (UPI) -- Bondholders for struggling casino owner MGM Mirage are discussing swapping debt for equity stakes after a possible bankruptcy filing, sources say.

Quoting "people familiar with the situation," Saturday's Wall Street Journal said discussions involving large MGM Mirage bondholders such as activist investor Carl Icahn and private-equity fund Oaktree Capital Management are focusing on having the Las Vegas firm file for Chapter 11 bankruptcy protection and then pumping in new capital.

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Majority stakeholder Kirk Kerkorian would likely be involved with the effort, one source asserted, saying, "The only way any of this would come into fruition would be with Mr. Kerkorian joining the group."

MGM Mirage is struggling under a $14 billion debt load while the recession has cut into revenues. The firm is also facing mounting pressure to finish construction its $8.6 billion CityCenter project on the Vegas Strip, the Journal said.

A bankruptcy filing by MGM Mirage would likely be strongly opposed, however, by banks holding $7 billion in unsecured debt. A Chapter 11 filing would put them on par with bondholders, the newspaper reported.

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