MGM Mirage sets talk for $1.5 billion deal; pricing early Thursday

By Paul A. Harris

St. Louis, May 13 - MGM Mirage set price talk on a significantly oversubscribed $1.5 billion two-part offering of senior secured notes on Wednesday, according to an informed source.

A tranche of five-year bullet notes is talked at the 11 1/8% area with 2 points of original issue discount.

Meanwhile a tranche of 8.5-year notes, with four years of call protection, is talked at the 11 5/8% area, also with 2 points of original issue discount.

Pricing is set for early Thursday morning.

The deal will not grow, according to market sources.

Allocations are expected to be severe.

Banc of America Securities LLC, Barclays Capital, Citigroup, RBS Greenwich Capital and Wachovia Securities are joint bookrunners for the Rule 144A with registration rights offer. BNP Securities, CommerzBank, Daiwa, Deutsche Bank Securities, JP Morgan, Morgan Stanley and UBS Investment Bank are co-managers.

The notes are secured by the Bellagio and Mirage properties.

Proceeds along with funds from a simultaneous $1 billion stock offering will be used to repay at least $750 million of bank debt, redeem all of the 7¼% senior debentures due 2017, purchase all of the 6% senior notes due 2009 of Mandalay Resort Group and senior notes due 2009 tendered in the pending tender offer, and for general corporate purposes.

MGM Mirage is a Las Vegas-based development company with gaming and resort operations.

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