S&P: MGM Mirage, Mandalay still on watch

Standard & Poor's said its ratings on MGM Mirage and Mandalay Resort Group, including the BB+ corporate credit ratings, remain on CreditWatch with negative implications.

The ratings were initially placed on CreditWatch on June 7 following MGM Mirage's announcement that it had launched an unsolicited bid to acquire Mandalay Resort Group. Subsequently, on June 16, MGM Mirage and Mandalay jointly announced that they had entered into a definitive merger agreement under which MGM Mirage would acquire Mandalay in an approximately $7.9 billion transaction.

While the definitive method of financing has not yet been made public, S&P said it has determined that if the transaction were 100% debt financed, the corporate credit rating on MGM Mirage would be lowered by one notch to BB. It is expected that the outlook would be stable.

The downgrade would primarily reflect the increase in pro forma debt leverage, defined as total debt to EBITDA, to a level that is very weak for the current ratings.

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