- The Washington Times - Wednesday, June 16, 2004

LAS VEGAS (AP) — The $4.8 billion buyout of Mandalay Resort Group Inc. by MGM Mirage will have global implications for the gambling and convention markets, according to company executives who yesterday previewed an aggressive growth plan stretching from Las Vegas to Singapore.

Hours after both boards unanimously approved the biggest casino deal in history late Tuesday, Terri Lanni, chairman and chief executive officer of MGM Mirage Inc., put competitors on notice that the gambling giant would not let the merger slow efforts to build new casinos around the world.

“With all of the additional resources we’ll gain from this transaction, we’ll be better able to compete across all segments of the gaming and leisure market,” Miss Lanni said in a conference call with analysts.

The terms of the agreement were a cash buyout of $71 per share and the assumption of $2.5 billion in Mandalay debt. It also includes about $600 million in bonds that can be exchanged for company stock.

The agreement calls for a $160 million breakup fee if the deal collapses, Glenn W. Schaeffer, Mandalay’s president and chief financial officer, told the Associated Press.

Jim Murren, MGM Mirage’s president and chief financial officer, said complete terms would be released within days, and he didn’t envision any problems financing the blockbuster deal between the two Las Vegas-based companies.

“We’ve reached out to many of our financial partners,” he said. “They’ve been wanting to run in here with a big checkbook.”

Mandalay’s executive management will help with the transition but will not stay on. MGM Mirage executives said most of Mandalay’s other employees would be retained. The company hasn’t announced any plans to change its name.

In trading yesterday on the New York Stock Exchange, Mandalay shares fell 8 cents to close at $67.80 while MGM Mirage shares were down 62 cents at $48.88.

MGM Mirage executives said they expect to complete the transaction by the first quarter in 2005 if antitrust issues don’t interfere. Mr. Murren said he doesn’t think gambling regulators will delay the deal, which has been reviewed by legal experts.

John Mulkey, a Bear Stearns gambling analyst in New York, said MGM Mirage will benefit in executing its expansion plans.

“We believe it’s a good acquisition for them,” Mr. Mulkey said. “Their size and brands would almost guarantee them a seat in any discussions for new gaming jurisdictions domestically or internationally.”

The transaction will give MGM Mirage revenue of $6.5 billion and control of 28 properties in Nevada, New Jersey, Illinois, Michigan and Mississippi. It will create the biggest gambling company in the world.

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