Moody's cuts MGM Mirage, confirms Mandalay

Moody's Investors Service said it downgraded MGM Mirage's senior secured and guaranteed debt ratings to Ba2 from Ba1. The outlook is stable.

Moody's downgraded MGM Mirage's guaranteed, secured senior notes and senior and subordinated shelfs to Ba2 from Ba1, senior implied rating to Ba2 from Ba1 and issuer rating to Ba3 from Ba2.

Mandalay Resort Group's Ba2 rated senior, unsecured notes and debentures were confirmed at Ba2, convertible floating-rate debentures due 2033 at Ba2 and senior subordinated notes at Ba3.

Moody's said the downgrade assumes that MGM Mirage's acquisition of Mandalay Resort Group will close in the first quarter of 2005 and will be financed with all debt.

The downgrade is based upon high pro-forma leverage (debt to trailing EBITDA) of 6.5x at closing, low interest coverage of about 2.8x (EBITDA/Interest) and the likelihood that leverage and coverage will remain near 5.5x and below 3.0xthrough 2006, according to Moody's.

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