Icahn plan for MGM would include Kerkorian: source

By Deena Beasley

LOS ANGELES (Reuters) - A plan for the restructuring of MGM Mirage (MGM.N), suggested by investor Carl Icahn, would involve swapping debt for equity and be done in concert with Kirk Kerkorian, MGM's majority shareholder, a source familiar with the situation said on Friday.

Another source said MGM and Dubai World have agreed to a set of terms that would ensure the completion of CityCenter, their jointly owned project on the Las Vegas Strip. The deal has yet, however, to be approved by banks providing financing.

"This is a three-way negotiation," the source said. "Banks are being asked to amend terms" of a $1.8 billion facility slated to become available in June.

The agreement does not involve bringing in another partner for the $8.7 billion project, the source said.

Under current terms, a debt default by MGM would trigger a default on the CityCenter loan. MGM has been talking since late last year of lowering its $13.5 billion debt load through actions like asset sales and restructuring.

"We continue to have productive conversations with our partners and lenders," said MGM spokesman Gordon Absher. Dubai World declined to comment.

The potential CityCenter deal is "somewhat bearish" for the stock, in that it may put a "ring-fence" around CityCenter, making any future bankruptcy filing by MGM less of a risk to the partnership, according to an MGM investor who was not authorized to speak on the record.

Icahn said during an interview with CNBC that there might be some merit in restructuring MGM, but he does not "in any way intend to be in a fight with Kerkorian."