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Atlantic City Round-Up

17 June 2002

by Joe Weinert

ATLANTIC CITY, New Jersey -- A Wall Street analyst bolstered the longstanding belief in Atlantic City that MGM Mirage is in no hurry to build a proposed $1.5 billion casino hotel in the seaside resort.

Robin Farley of UBS Warburg said MGM Mirage's ability to capitalize interest on its 93 remaining acres of developable land in Atlantic City adds 20 cents per share to the company's annual earnings. Last year, MGM Mirage earned $1.06 per share.

"Therefore, it may make sense for MGM Mirage to have that wholly owned property in development for a while," Farley said in a research report.

Jim Murren, MGM Mirage president and chief financial officer, acknowledged the earnings benefit but denied any suggestion that the company is trying to prolong its planned Atlantic City development.

"We did a review of all our projects in various stages of development in early 2001 and in January (of that year) we determined that the next major, wholly owned resort for the company would be in Atlantic City on Renaissance Pointe, and therefore we moved forward on that basis and have been moving forward at different speeds, based on the events of 9-11 and other factors, and have made the commitment to go to Atlantic City, so there's no gray area," Murren said.

Chairman and CEO Terry Lanni said last month that MGM Mirage plans to break ground in September in 2003.

Companies are required to capitalize, or defer, the interest payments incurred on land acquired, Murren and analysts said, so long as it's considered in development. MGM Mirage acquired its prime Atlantic City casino land when it bought Mirage Resorts two years ago.

*****

Donald Trump's casino company found a small, short-term solution to a potential cash crunch next year.

Trump Hotels & Casino Resorts received a $70 million bank loan from Deutsche Bank, which will be used to retire $67 million in Trump Marina debt due next April.

The new bank loan will expire in November 2003, same time as the other primary chunk of Trump Marina debt, $242.1 million in mortgage notes.

"With the Marina, based on its numbers, we think we're going to be able to refinance that quite easily," Trump said.

Trump Hotels canceled a proposed $470 million bond sale last month, rejecting the high interest rates demanded by investors.

*****

Donald Trump said he can't understand why shares of Trump Hotels & Casino Resorts, which traded at more than $35 six years ago, have been stuck at mostly below $3 the past two years.

"I think, really people don't understand the company and that's why the stock is where it is," Trump told shareholders at the company's annual meeting at Trump Taj Mahal in Atlantic City. "But I'm a buyer of stock. I've bought a lot of stock and continue to buy stock, as recently as (last Tuesday), and I think it's a wonderful investment."

In response to a shareholder question, Trump, who owns 46.4 percent of the company assuming certain conversions, denied a rumor that he's planning to take the company private at $6 per share.

*****

The New Jersey Division of Gaming Enforcement settled two of its civil suits against Internet sports books that it said marketed to, and accepted bets from, people in New Jersey.

Intertops.com, based in Antigua, agreed to stop accepting wagers from New Jersey and to post a notice on its Web site that such wagers are prohibited.

Curacao-based Intercasino.com and the company that developed its software, Nasdaq-listed CryptoLogic of Toronto, agreed to a similar settlement. CryptoLogic said it would not allow any entity it does business with to accept wagers from New Jersey.

"Internet gambling remains illegal in New Jersey and the state will continue to pursue all pending Internet gambling actions vigorously," said Tom Auriemma, DGE acting director.

The DGE has cases pending against six other online sports books and three online casinos.

*****

New Jersey's new governor, Democrat James E. McGreevey, said he wishes his state's gambling capital could be more like Nevada's gambling capital.

"It's the focus on families, the ability to take your children to a children's show, to have dinner. I don't gamble, but yet Las Vegas offers many family recreational opportunities. Part of it is to literally change the mindset (in Atlantic City), to work cooperatively and constructively with the industry to maximize the industry's capital investment," McGreevey said.

The governor repeated his pledge for state cooperation to make Atlantic City more of a family-friendly vacation resort.

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