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MGM Mirage Owner Must Deal With Creditors After Ford Sell-Off

Now investors and analysts wonder if the MGM Mirage shares pledged to back the Ford loans are safe.

MGM Mirage owner Kirk Kerkorian has sold the remaining shares of Ford Motor his Tracinda Corporation had purchased. Now comes reconciling the huge losses he suffered during the short period of investment in the auto manufacturer.

Tracinda used its controlling interest in MGM Mirage as backing for loans to acquire over a billion dollars in Ford stock this past spring, buying 133.5 million shares at a price of $7.10 per share. But the recession and economic crisis hit full force shortly afterward. Tracinda announced in regulatory filings in October its intention to divest itself of the Ford shares, and return to its roots as a casino and gambling operator.

But the decline in Ford's value meant unloading the stock at roughly thirty-three cents on the dollar, a loss of two-thirds what was paid only months ago. Now investors and analysts wonder if the MGM Mirage shares pledged to back the Ford loans are safe.

MGM Mirage has been having its own stock issues. Continuing questions concerning liquidity and high debt have led to further investment by Dubai World, and the sale of one of the company's Las Vegas Strip casinos, the Treasure Island Casino and Hotel.

MGM Mirage stock fell $0.26 today, to settle at $12.74, on a day with generally slight declines in the gaming industry. So far, investors haven't panicked and rushed to sell off MGM Mirage, perhaps feeling that Kerkorian can renegotiate his Ford loans to repay them without having to sell Tracinda's stake in MGM Mirage.

Published on December 29, 2008 by K.C.Carmichael

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