Senior Secured Notes Offering. Investor Presentation March 2010

Transcription

1 Senior Secured Notes Offering Investor Presentation March 2010

2 SAFE HARBOR PROVISION This presentation includes or incorporates by reference forward-looking statements that are based on our current expectations and assumptions regarding rding our business, the economy and other future conditions. Forward-looking statements can be identified by words such as anticipates, anticipates, intends, intends, plans, plans, seeks, seeks, believes, believes, estimates, estimates, expects, expects, and similar references to future periods. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we caution you against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, l, economic, business, competitive, market and regulatory conditions and the following: our substantial indebtedness and significant financial commitments; ts; current and future credit market conditions and general economic and business conditions, which could adversely affect our ability to service or refinance our indebtedness and to make planned expenditures; our senior credit facility and other senior indebtedness contains s restrictions which affect our ability to operate our business and our liquidity; competition with other destination travel locations throughout the t United States and the world; the fact that several of our businesses are subject to extensive regulation; the cost or failure to comply with these regulations s would affect our business; effects of economic conditions and market conditions in the markets in which we operate; extreme weather conditions may cause property damage or interrupt t our business; changes in energy prices; our concentration of gaming resorts on the Las Vegas Strip; leisure and business travel is susceptible to global geopolitical l events, such as terrorism or acts of war; investing through partnerships or joint ventures, including CityCenter Center and MGM Grand Macau, decreases our ability to manage risk; plans for future construction can be affected by a variety of factors, including timing delays and legal challenges; the outcome of any ongoing and future litigation; the fact that Tracinda Corporation owns a significant portion of our stock and may have interests that differ from the interests of our other shareholders; and a significant portion of our labor force is covered by collective e bargaining agreements. The forward-looking statements included or incorporated herein are made only as of the date of this presentation. Other factors or events not t identified above could also cause our actual results to differ materially from f those projected. Most of those factors and events are difficult to predict accurately and are generally beyond our control. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 1

3 TRANSACTION OVERVIEW MGM MIRAGE is offering Senior Secured Notes due 2020 Proceeds from the transaction will be used to prepay a portion of the outstanding amount under the Company s s existing $5.55 billion senior credit facility and for general corporate purposes The notes will be secured by a first priority lien on substantially all of the assets and a first priority pledge of 100% of the equity interests of MGM Grand Las Vegas (1) (1) Security in equity interests upon receipt of the necessary gaming g approvals. The notes will not be secured by The Signature at MGM Grand. 2

4 Issuer: Issue: Maturity: Expected Ratings: Optional Redemption: OFFERING SUMMARY MGM MIRAGE Senior Secured Notes 2020 (10 years) B1 / B Non-callable for 4 years Security (1) : The notes will be secured by a first priority lien on substantially all of the assets of the MGM Grand Las Vegas, which is located in Las Vegas, Nevada and, upon receipt of the necessary gaming approvals, a first priority pledge of 100% of the equity interests in MGM Grand Hotel, LLC Change of Control: Covenants: Distribution: Investor put at 101% plus accrued interest Usual and customary high yield covenants / Substantially similar to the % and % Senior Secured Notes 144A as amended (1) The notes will not be secured by The Signature at MGM Grand. 3

5 TIMELINE March S M T W T F S Tuesday, March 9: Tuesday, March 9: Tuesday, March 16 (T+5): Announce Senior Secured Notes Offering Price Senior Secured Notes Offering Close and Fund Senior Secured Notes Offering 4

6 MANAGEMENT PARTICIPANTS James J. Murren Chairman and Chief Executive Officer Dan D Arrigo Executive Vice President and Chief Financial Officer 5

7 INVESTOR HIGHLIGHTS Last Opportunity to Invest in New Secured Note Security in Assets and Equity of MGM Grand Las Vegas Significant Operating Leverage Drives Ability to Generate Strong Free Cash Flow Low Capital Requirements Going Forward Highest Quality Resort Portfolio with Growing Presence in Macau CityCenter will Drive Growth in Las Vegas Longstanding History of Accessing the Capital Markets Strong Support from Banks Proven Track Record as the Premier Gaming Operator 6

8 BUSINESS UPDATE Current State of the Las Vegas Economy MGM MIRAGE Overall Business Update MGM MIRAGE Convention Outlook Overview of MGM Grand Las Vegas CityCenter Update Impact of Aria on Existing MGM Properties Roadmap to Improving Balance Sheet 7

9 LAS VEGAS MARKET STABILIZING Back to Our Roots - Value Destination Last Four Months Visitation up 3.1% Strip Gaming Revenues Improving - December up 5.9% Airline Passenger Declines Slowing / Load factors Up January -0.2% (excluding US Air +5.8%) Terminal 2 (Int l l up 6.5%) Auto Traffic up 4.0% in 2009 Las Vegas Continues to Take Share in Convention Business Convention Attendance 10-15% 15% Higher When Held in Las Vegas Source: LVCVA and Nevada Gaming Control Board. 8

10 LAS VEGAS INDICATORS RECOVERING Source: LVCVA. 9

11 MGM STRIP EBIDTA HIGHLY CORRELATED TO GDP (1) (1) Source: Federal Reserve. 10

12 MGM CURRENT TRENDS International High-End Business Strong Domestic Business Still Challenged Convention Booking Pace for 2H10 & Beyond Improving Las Vegas Environment is Extremely Competitive Especially Weekdays Continued High Customer Satisfaction Scores Response to CityCenter has been Extremely Positive Awareness of Aria Improving in Marketplace 11

13 CONVENTION OUTLOOK Q4/09 & Q1/10 Expected to be the Trough Historical Booking Patterns Returning / Attrition Slowing Booked Approximately 440,000 Convention Room Nights in Q4/09 On top of 550,000 Room Nights Booked in Q3/09 Not a Zero Sum Game: Added Convention Rooms = Fewer Rooms Available to Other Blocks = Pricing Power ADRs for Convention Block $50 to $100 Higher than Current FIT/Leisure Rates Convention Improvement Leverages Ancillary Revenues (Catering, Restaurants, etc.) 12

14 LAS VEGAS STRIP BACCARAT GROWTH (REVENUE IN MILLIONS) 6% CAGR Source: Nevada Gaming Control Board 13

15 New Players Club Launch LOYALTY MARKETING 60M in Database, 29M Current Players Club Customers New Players Club will be Transparent, Accessible, Aspirational New Look, Tiered Cards, Revealed Comps Via Kiosk & Web Access to Direct Comps & Promotions Expand the Players Club Brand Holistic Approach Targeting Both Gaming & Hotel Customer ESS Partnership First Step into Database Analytics 14

16 SUBSTANTIAL OPERATING LEVERAGE (35,000 Rooms in Las Vegas (1) ) Annual EBITDA Impact Increase in Occupancy of 1% = $36M Increase in ADR of $5 = $54M Additional Consumer Spend of $5 = $38M (1) Excludes CityCenter 15

17 MGM GRAND LAS VEGAS 16

18 MGM GRAND OVERVIEW Opened in 1993 at an original cost of $954 million Prime location at the corner of the Las Vegas Strip and Tropicana a Avenue 5,044 guest rooms and suites (AAA Four Diamond Award) West Wing, Skylofts (AAA Five Diamond Award) and Mansion 158,000 square feet of gaming KÀ by Cirque du Soleil MGM Grand Garden, a special events center with seating capacity for over 16,000 Restaurants, bars and nightclubs, including: Joël Robuchon (AAA Five Diamond Award and Michelin three-star rating), Craftsteak,, NOBHILL, Studio 54 nightclub, Tabu ultra lounge 380,000 square foot state-of of-the-art conference center More than $500 million spent on renovations or expansions since opening Over $100 million room renovation starting in

19 MGM GRAND LAS VEGAS 18

20 MGM GRAND PROPERTY FINANCIALS ($ in millions) Net Revenue $1,147 $1,020 $904 Property EBITDA $397 $280 $221 Hotel Statistics: Occupancy % 96.2% 95.5% 94.2% ADR $163 $147 $113 RevPAR $157 $141 $106 Note: Figures exclude The Signature at MGM Grand. 19

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22 CITYCENTER UPDATE CityCenter Opened in December Complex has Received Strong Customer Reviews Volumes for Chinese New Year & Super Bowl were Strong Convention Center Booking Pace Accelerating Crystals Retail Mall Continues to Energize Late Jan. & Feb. Openings - Hermes, Puck Pods, Versace, Lanvin, Fendi,, Puck Brasserie, Mastro s Ocean Club, Todd English Pub Occupancy Expected to be 85% by End of 2010 MGM MIRAGE Sister Properties Continue to Perform Well Cross Marketing Between Luxury Brands Very Successful 21

23 RECENT ACCOMPLISHMENTS Raised $3.9 Billion in the Capital Markets in 2008 & 2009 Successfully Tendered for $883 Million of 2009 Bonds Sold TI for $755 Million Continue to De-Lever Balance Sheet Received Approval to Amend & Extend Senior Credit Facility See following page for details on the Amended & Extended terms 22

24 BANK AMENDMENT & EXTENSION On February 25, 2010, MGM MIRAGE entered into an amendment to its s credit facility: Permits issuance of up to $850 million of secured indebtedness Permits issuance of unsecured debt and equity to repay interim debt d maturities Permits transfer of 50% Borgata interest into trust The amendment requires consenting lenders to extend their commitments ments from the current October 3, 2011 maturity date to February 21, 2014 Extending commitments are entitled to a 20% required prepayment and a 100 bps increase in drawn pricing 79% of lenders voted to extend their commitments, resulting in a required prepayment of approximately $820 million Post-paydown, $1.18 billion will mature in 2011 and $3.55 billion in 2014 Existing minimum EBITDA and maximum annual capital expenditure covenants will continue during the extension period with periodic c step-ups 23

25 STRENGTHENING BALANCE SHEET Full Access to Capital Markets Unsecured Access Beyond 2011 Minimal Capital Requirements in 2010 Potential Macau JV IPO Distributions from Joint Ventures MMH - Utilizing Brands & Management Opportunities Operating Leverage Allows MGM MIRAGE to Maximize FCF Non-Core Asset Sales (including Borgata) Expected Tax Refunds 24

26 INVESTOR HIGHLIGHTS Last Opportunity to Invest in New Secured Note Security in Assets and Equity of MGM Grand Las Vegas Significant Operating Leverage Drives Ability to Generate Strong Free Cash Flow Low Capital Requirements Going Forward Highest Quality Resort Portfolio with Growing Presence in Macau CityCenter will Drive Growth in Las Vegas Longstanding History of Accessing the Capital Markets Strong Support from Banks Proven Track Record as the Premier Gaming Operator 25

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