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MGM Mirage faces Friday deadline for $70 million CityCenter payment

Feuding CityCenter partners MGM Mirage and Dubai World are trying to repair their fractured relationship in an attempt to fund the remaining costs needed to complete the $8.7 billion Strip development.

MGM Mirage said late Monday it will wait until Friday to make a $70 million equity payment that is due on CityCenter, even though the company received a waiver from lenders allowing it to cover both its half of the payment and the half owed by Dubai World.


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  • MGM Mirage is hoping Dubai World, the investment arm of the Persian Gulf emirate, will fund its portion of the payment. However, a source familiar with the talks between the two companies, said that was unlikely.

    “MGM Mirage remains committed to finding a long-term solution to the financing of CityCenter to ensure the completion of this important project,” the company said in a statement.

    MGM Mirage and Dubai World, which each own 50 percent of CityCenter, have been negotiating with the development’s lenders since last week. Dubai World reportedly wants the two companies and the lenders to commit a combined $3 billion to finish the development, which is expected to be fully open by December.

    News of the talks sent shares of MGM Mirage up 95 cents, or 17.92 percent, Monday on the New York Stock Exchange. The stock price closed at $6.25, a jump of more than 130 percent since April 1. Still, the price is down more than 90 percent from a year ago.

    Dubai World sued MGM Mirage last month, questioning CityCenter’s viability and claiming MGM Mirage had mismanaged the venture leading to cost overruns. Dubai World also said MGM Mirage’s quarterly financial filing in March constituted a breach of the joint venture pact.

    A week after the lawsuit was filed in Delaware, MGM Mirage, with approval from its lenders, made a $200 million equity payment toward CityCenter, which included Dubai World’s portion of the payment.

    Dubai World said the move was “an acceptable, albeit temporary solution.” MGM Mirage officials have said the company has the available cash necessary to fund its portion of the CityCenter project.

    If an equity payment is missed, CityCenter could be forced into bankruptcy, which would shut down work on the project and idle some 8,500 construction workers.

    Dubai World has $4.3 billion invested in CityCenter. A source close to Dubai World said the entity’s goal is to complete CityCenter.

    Recently, MGM Mirage told its 61,000-plus workers that cost-of-living raises were being suspended for all of 2009. Also, 401k matching contributions were canceled for the year and the company increased by $10 per pay period employees’ contributions for health care benefits.

    The moves are part of the ongoing cost reductions being undertaken by the Strip casino giant.

    Some employees, whose anniversary dates fell in the first quarter, received cost-of-living increases before the March announcement. Their salaries reverted back to 2008 levels on April 1.

    MGM Mirage spokesman Gordon Absher didn’t know how many workers received a pay increase, but they will be allowed to keep the extra money earned in the quarter.

    Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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    Rick wrote on April 13, 2009 08:04 PM: Hey Mike, don't even waste your time. He's like the slug on the evolutionary scale. By the way, there are a lot more out there.

    I do hope that City Center gets completed since it's supposed to be the beacon on the Strip. It will not only benefit the 8,500 workers, dozens of companies and the MGM, but it will be a morale boost for the City at large.


    Leric Goodman wrote on April 13, 2009 07:53 PM: Dubai World is treading dangerous waters by not making its payments on City Center. MGM could declare Dubai World in breach of the joint venture agreement and go the rest of the way alone with other financing, or MGM could sue to enforce the joint venture agreement. If MGM goes into Chapter XI, it could do the same in the Bankruptcy Court, where the Bankruptcy Judge would be likely to rule for MGM to assist in its reorganization.


    LV Nut wrote on April 13, 2009 07:20 PM: Let it tank, it looks ugly. With everything going under, who is going to spend the money to make it survive.
    Stand on top of the Green Vally parking garage and look at the strip. It looks so sad.


    Ted from Summerlin wrote on April 13, 2009 07:02 PM: I echo that.

    Thanks Mike.


    Mohave Max wrote on April 13, 2009 06:43 PM: Thank you Mike.


    Mike Heath wrote on April 13, 2009 05:56 PM: Spell Check: I wrote four paragraphs without any proof-reading or spell check. And you are complaining about one type-o?

    As for the content of my comment, I'm sorry for being so glib. But, I'm tired of the racist rants that so predictably pop up in every comments thread of this publication. And yes, systematically judging entire populations of people based on nothing more than race, religion, or country of origin is evidence of ignorance and undereducation.


    Spell Check wrote on April 13, 2009 05:00 PM: Hey Mike,

    Consistently not consistantly. They must have taught that in 5th grade.


    real deal wrote on April 13, 2009 04:53 PM: Mike you fool,, comment on the story or go back to your doritos and ice cream you my space freak


    Mike Heath wrote on April 13, 2009 03:11 PM: neverwinanythingaroundhereanymore:

    Yet another mindless, incoherent post from the ignorant and mindblowingly undereducated masses that post on LVRJ.com articles every day. Because of people like you, Las Vegas is consistantly ranked as one of the dumbest cities in America.

    While its unfortunate that so many under educated people like yourself lack anything more than compulsory reading or writing skills, its even more unfortunate that at some point in your life you actually learned enough reading and writing skills to post your comments on this site. Las Vegas and this country would actually be better off if the fourth grade equivalent education you received had so utterly failed you that you might not have learned to write even the drivel you manage to post on this site.

    I guess for once, and only once, Clark County schools are a victim of their own success.


    localguy wrote on April 13, 2009 02:32 PM: Ahh! The plot thickens =)

    Have they already sold there other properties to make this payment?

    I dont' think MGM made 70mil in gaming revenue lately. They might be digging themselves a deeper whole by prolonging the inevitable.


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