Capital Markets

MGM Funds Save Big Vegas Project, for Now

The casino firm puts up not only its own share of scheduled joint-venture financing, but its partner's portion as well. The partner, Dubai World, i...
Stephen TaubMarch 27, 2009

MGM Mirage said Friday that it has provided $200 million of funding to the controversial, financially shaky CityCenter project in Las Vegas.

The struggling casino company said the money satisfies required contributions due last week, including $100 million that was supposed to have been funded by CityCenter partner Dubai World.

MGM’s move may have headed off bankruptcy for the megaproject. “This allows construction to continue while MGM Mirage seeks additional funding for CityCenter,” the company said. With Friday’s funding, the remaining combined equity contributions necessary to access the CityCenter credit facility are about $800 million.

“We are doing our utmost to see that this project continues, keeping thousands of Nevadans employed,” said Jim Murren, chairman and CEO of MGM Mirage, which is majority-owned by Kirk Kerkorian.

CityCenter is MGM’s ambitious city-within-a-city, featuring four luxury high-rise residential condo developments on the Las Vegas Strip.

Earlier in the week, Dubai World announced that its subsidiary Infinity World, a joint-venture partner in the CityCenter development, filed a lawsuit in Delaware Chancery Court alleging that admissions in MGM’s annual report filed on March 17 constitute a breach of the venture agreement and put the project at risk.

In a press release, Dubai World noted that among other risk factors revealed in the 10-K, MGM stated that “There is substantial doubt about our ability to continue as a going concern.”

Dubai World also quoted MGM as saying it “cannot provide assurance” that its business would generate sufficient cash flow from operation or that sufficient future borrowings would be available under its senior credit facility to pay its indebtedness or fund other liquidity needs.

In its court filing, Infinity World asked to be relieved of its obligations under the joint-venture agreement, according to Dubai World.

The Wall Street Journal noted that Dubai World has blamed MGM for huge cost overruns on CityCenter.

MGM said the suit is “completely without merit,” according to The Journal.


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