Mirage lining up financing for its next LV megaresort

Mirage Resorts Inc. will likely begin construction on a new megaresort on the site of the Boardwalk hotel-casino sometime next year.

The announcement was made by Dan Lee, Mirage's chief financial officer, at a Nevada Gaming Control Board meeting this week. Last week, Mirage raised $416 million by selling 16.6 million shares in a spot secondary offering through Goldman Sachs & Co.

Lee said the proceeds will be used to fund construction of two Mirage resorts in Atlantic City, and to build a new resort on land located between the Monte Carlo and Bellagio hotel-casinos that Mirage acquired last year for $25 million.

The site is currently occupied by the 654-room Boardwalk.

"We'll probably be in construction on something there during the year 2000," said Lee.

The Las Vegas gaming market is absorbing supply faster than expected, said Lee, prompting Mirage to accelerate its construction plans from 2002 to next year.

Recent Gaming Control Board and Las Vegas Convention and Visitor Authority figures bear Lee out. Las Vegas visitation rates have risen steadily in recent months. In March, Nevada casinos won $747 million, the third most in state history.

Lee said the company is not yet prepared to announce the specifics of the project, but indicated it would cost at least $1 billion.

Mirage does not want to borrow more money to build, because that would cost the company its BBB+ investment-grade debt rating, said Lee. In its first quarter ending March 31, Mirage reported carrying $2.5 billion in debt.

Lee said last week's offering "was the largest equity deal ever done, in my memory, in this industry." The shares were sold in a block to Goldman Sachs, which paid $25 a share. Goldman Sachs will in turn sell the shares on the open market.

Mirage stock closed Thursday evening at $23.75 per share, down 6 cents per share.

Mirage will issue debt at some point, but felt it prudent for liquidity reasons to issue equity first, said Lee.

"We do intend to issue debt at some point, but if you're going to issue equity and debt it's better to issue the equity first," said Lee.

Lee was before the Board seeking routine bi-annual authorization for a company shelf offering. In a shelf offering, a company seeks advance regulatory approval for sales of stock or debt securities. The company is then free to sell securities when needed or when market conditions are favorable.

Lee also briefly discussed other Mirage operations. He said occupancies and gaming win are rising at the company's Beau Rivage resort in Biloxi, Miss., and that Mirage's plans for two Atlantic City resorts -- one wholly-owned, and one to be built in a joint-venture with Boyd Gaming Corp. -- are "on schedule and on budget."

In other action, the Board:

Approve an unlimited, nonrestricted gaming license for Casino Bar & Sports Inc., which does business as Sports World Casino, 3049 Las Vegas Blvd. South, owned by James R. August Sr. The approval was granted despite concerns about gaming machines and tables August transferred from Nevada to Pennsylvania, concerns about an aborted stock transfer between August and his son, and concerns about loans and payments made between companies owned by August. Board members were impressed that Sports World's financial condition has improved in the two years since August was granted a limited gaming license.

Approved an unlimited, nonrestricted gaming license for Daniel A. Cassella, president and chief executive of the Stratosphere hotel-casino, and executive vice president of the Arizona Charlie's hotel-casino.

Approved routine shelf stock offerings by Aztar Corp. and Station Casinos Inc.

Accepted a Board agent's rejection of Anna L. Barton's claim that she won $68.7 million while playing Cool Millions at the Silverton hotel-casino. Barton's machine locked up after three wild-card symbols lined up on the pay-line. The wild card symbols were not listed on the machine's pay table. Barton claimed she should be awarded a multiple of the Cool Millions meter at that time, which read $8.6 million. The Board rejected that claim, and instead awarded Barton $4,427, the amount she would have won if she'd lined up three sevens on the machine.

Lee

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