Stock surge not seen in Vegas

LAS VEGAS, Nevada -- While the U.S. stock market recorded its strongest monthly gains in more than six years during March, the results didn't filter down to the gaming sector.

The stock prices of major casino operators continued on a double-digit downward spiral in the month as liquidity issues and multibillion-dollar debt loads triggered fears among investors. Only three of the 10 companies tracked by Las Vegas-based financial consultant Applied Analysis showed an increase during the month.

"Leverage once allowed gaming developers and operators to take advantage of favorable market conditions," Applied Analysis partner Brian Gordon wrote in a report Tuesday. "Yet, many are now facing a much different credit profile due to an environment that is worse than forecasted worse-case scenarios."

The average daily stock prices of MGM Mirage (down 47.3 percent compared with February) and Las Vegas Sands Corp. (down 28.1 percent) are off more than 95 percent each compared with a year ago.

Wynn Resorts Ltd., which doesn't have the liquidity and debt issues facing MGM Mirage and Las Vegas Sands, still had its average daily stock price decline 23.5 percent in March; the price is off 80 percent from a year ago.

March's sinking stock prices dragged down the Applied Analysis Gaming Index to 189.50. The index, which looks at more than 300 different market variables and economic indicators, fell to its lowest figure since August 2003.

The biggest issues during March affected MGM Mirage, which sold Treasure Island for $775 million and faced a lawsuit at the end of the month from Dubai World, its joint-venture partner in the $8.7 billion CityCenter development. Last week, MGM Mirage made a $200 million payment to keep CityCenter out of bankruptcy, which would have potentially shut down the development.

Gaming analysts have suggested MGM Mirage may have to file a bankruptcy reorganization as a company to handle some $13.5 billion in long-term debt. The casino operator received a two-month waiver from its lenders on March 17 to avoid violating loan covenants.

"MGM Mirage was the most profiled operator during the month as a series of events raised concerns with investors," Gordon said.

Meanwhile, Las Vegas Sands saw President Bill Weidner, board member James Purcell and Executive Vice President Brad Stone all resign in a management shake-up.

Only three companies had positive months; regional casino operators Ameristar Casinos (up almost 22 percent) and Penn National Gaming (up almost 9 percent) and slot machine maker WMS Industries (up 2.5 percent).

Penn National, which has roughly $1.5 billion in cash on its books, has been linked to potential purchases of different casinos owned by MGM Mirage and Harrah's Entertainment.