After MGM Mirage reached an agreement with lenders on Apr. 13 that avoided a cutoff in credit, the casino operator's shares rose 18%. The spike can be attributed to short-covering, as traders who bet on MGM's imminent insolvency rushed to cover positions. While traders are still betting MGM won't resolve all its debt woes soon, Union Gaming Group's Bill Lerner notes it has billions in collateral to back any amended loan and is trying to sell casinos to raise cash. And with MGM Nevada's largest employer, Washington could pressure lenders to renegotiate. If that happens, Lerner says, expect another price spike.
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|Date:||Apr 23, 2009|
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