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Rod Smith

MGM Mirage to Double Stock, Keep Focus

4 May 2005

LAS VEGAS -- While panning Las Vegas as a community without a heart, MGM Mirage executives Tuesday outlined bold plans at the company's annual meeting for giving the destination an ambitious new urban core.

A plan to double the number of outstanding shares from 300 million to 600 million also was approved for shareholders of record as of close of business today.

During the meeting at Bellagio, MGM Mirage Chairman Terry Lanni reviewed plans for his company's investments around the world, especially in the Far East. But he focused on the 831 acres the company owns on the Strip, 150 acres of which are undeveloped and targeted for new projects, especially the $4 billion Project CityCenter south of Bellagio.

"We were a Strip-centered company before the merger, and we continue to be after the merger, because we believe that Las Vegas' success is not a short-term phenomenon, but a long-term trend," Lanni said, referring to the company's just completed merger with Mandalay Resort Group.

MGM Mirage President and Chief Financial Officer Jim Murren said the Mandalay acquisition gives MGM Mirage the chance to "double down" on its contribution to the Las Vegas community.

Project CityCenter, which is set to open in 2009, will change the face of Las Vegas forever, he said.

While discussing the company's focus on its resorts, Murren addressed the future of the other Las Vegas, "a community of almost 2 million residents on its way to 3 million by the end of the decade."

He said as the largest employer, the largest investor and the largest real estate owner, MGM Mirage is in a unique position to help shape the future of the other Las Vegas.

The future of Las Vegas will be centered around the revitalization of downtown Las Vegas, the redevelopment of the midtown section around the University of Nevada, Las Vegas and the development of CityCenter and other MGM Mirage projects, he said.

"We believe there is a social imperative, that Las Vegas mature as a city, not just a conglomeration of suburbs," Murren said.

"A city deserves a center -- a center for living, working and playing -- and we want to be an integral part in defining the Las Vegas of the future," he said.

But he said there is also a business motivation for MGM Mirage in helping to shape and build that future.

"We are hiring the world's best urban planners and architects to forever change the way we develop here," Murren said. "We plan to break out of the gaming mold, and define a company based on extensive holdings in multiple businesses."

And with its land and its development plans, Murren and Lanni said MGM Mirage's contribution to Las Vegas' future will be without peer.

In addition, Lanni said MGM Mirage anticipates linking the monorail to the airport and extending the people mover, which starts at Mandalay Bay Resort and runs to New York-New York, to Caesars Palace, The Mirage and Treasure Island, connecting the Strip's entire eastern side.

He expressed hope that Harrah's Entertainment, which expects to take over Caesars Entertainment before July, will be open to the idea and said it is likely that there will eventually be a mass transit system up Frank Sinatra Drive to downtown Las Vegas.

All of this will be possible, Lanni said, because of the incredible growth the gaming industry is generating.

"Where many people thought it was a maturing industry, it's become a growth industry," he said.

MGM Mirage officials expect the stock split plan announced last month and approved Tuesday will cut the trading price of shares in half, but they expressed optimism prices would appreciate as they have in the past.

Bear Stearns gaming analyst Joe Greff said MGM Mirage is hoping to stimulate retail interest in its stock by keeping its share prices low.

MGM Mirage's bond rating recently was downgraded by Standard & Poor's to junk status, largely because the company took on added low-interest, short-term bank credit to finance its $7.9 billion takeover of Mandalay Resort Group.

Its $7 billion revolving bank credit line, undertaken for the transaction, is the largest in gaming industry history, Murren told the annual meeting.

The company could instead have issued added shares, but chose to avoid diluting shareholder values, he said.

Murren said MGM Mirage plans to pay down debt quickly, as it did after its takeover of Mirage Resorts five years ago.

The strategy contrasts sharply with Harrah's Entertainment, the only gaming company with institutional grade credit.

Harrah's has made maintaining its credit rating a hallmark of its planned $9.4 billion merger with Caesars Entertainment.

MGM Mirage closed Tuesday at $68.10, down $1.90 or 2.7 percent, on normal trading volume of 1 million shares.

MGM Mirage to Double Stock, Keep Focus is republished from