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MGM Mirage (MGM) swung to a fourth-quarter net loss on a $1.2 billion write-down, reflecting a difficult environment that prompted the debt-laden company's auditor to raise doubts about its ability to continue as a going concern.

The casino resort operator said weakness in gaming and the economy in general have continued into the first quarter, a situation that will push the company out of compliance with its senior credit facility covenants this year if it continues.

A default there could lead to cross defaults that would accelerate required payments under the company's indentures and the CityCenter project's $1.8 billion senior secured credit facility, resulting in the termination of unfunded commitments under the CityCenter credit facility.

MGM Mirage did get some breathing room when its lenders granted a waiver of covenants on its senior credit facility through May 15. As part of that agreement, it repaid $300 million of the outstanding borrowings under the facility and will continue to make its required equity contributions to its giant CityCenter project through May 15.

The company plans to continue talking with lenders to obtain additional waivers or amendments.

"While there is still work to be done, this is a positive step that provides us with the opportunity to continue to work with our financial advisors and our bank group in addressing the company's current financial position," said Chief Executive Jim Murren.

"The current economic climate remains challenging, but we are still driving high occupancy at our resorts, which are in terrific shape," he added.

MGM Mirage, which has a big presence on the Las Vegas Strip, may sell more assets as it races to negotiate new terms with lenders to avoid defaulting on its debts. The company, which has been struggling to complete work on its giant CityCenter condo and hotel project on the Strip, in recent months has amended its credit line, sold $750 million in debt and agreed to sell Treasure Island in Las Vegas for $775 million.

MGM Mirage, controlled by financier Kirk Kerkorian, reported a net loss of $1.15 billion, or $4.15 a share, compared with net income of $872.2 million, or $2.85 a share, a year earlier.

The latest results included a $1.2 billion write-down related to its 2005 purchase of Mandalay Resort Group because of lower market valuations, higher discount rates because of turmoil in the credit markets and reduced cash-flow forecasts based on market conditions. The prior-year quarter's results included a gain of $2.23 a share from its sale of a half-interest in CityCenter to Dubai World.

Revenue dropped 16% to $1.62 billion.

Analysts estimated per-share earnings of 14 cents on revenue of $1.71 billion, according to a poll by Thomson Reuters.

MGM Mirage, which has 17 casinos in Nevada, Mississippi and Michigan and 50% stakes in four others in Nevada, New Jersey, Illinois and Macau, said total gambling revenue and total table games volume both fell 17%. Slots revenue decreased 12%.

Room revenue dropped 21%, while nongaming revenue, excluding rooms, fell 9% on lower customer spending and reduced occupancy rates.

Quarterly revenue per available room, the lodging industry's benchmark known as RevPAR, for the company's Las Vegas Strip properties fell 21%, as average daily room rates declined 15% and occupancy fell to 85% from 93%.

Moody's Investors Service last week lowered its credit ratings on MGM Mirage for the second time in two weeks, reflecting a rising probability of default. The downgrade followed ratings cuts by all three major ratings firms after MGM Mirage asked to borrow $842 million under its $4.5 billion credit pact.

MGM Mirage's shares were at $2.99, down 1.3%, in after-hours trading. The stock price has fallen 95% in the past year.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com