DOW JONES NEWSWIRES
MGM Mirage (MGM) made a $200 million payment due Friday to its
City Center project, including the $100 million owed by its
now-disgruntled partner, to keep the massive resort and casino
project from halting construction and potentially falling into
bankruptcy.
There had been speculation that City Center, the $8.6 billion
Las Vegas development owned by MGM, would miss the payment and file
for bankruptcy protection, putting the completion of the massive
project in doubt.
Shares, which were down 19% ahead of the news, were halted at
$2.51 ahead of the news but rebounded afterwards. They recently
were up 5.2% at $3.25 in recent trading.
MGM said Friday it would work with Dubai World, its investment
partner in the project, and its lenders to find "a long-term
solution for the financing of City Center's completion."
Chairman and Chief Executive Jim Murren added, "We are doing our
utmost to see that this project continues, keeping thousands of
Nevadans employed. We will continue to make every effort to see
that City Center is completed."
MGM was sued earlier this week by Dubai World, which alleged the
troubled casino operator breached the terms of their venture. MGM
has said the suit is "completely without merit." Dubai World has
blamed MGM for massive cost overruns on City Center.
The City Center project is a stark example of how excesses
spawned during a lengthy gambling boom are coming back to haunt the
casino industry. The project is so large that thousands of workers
depend on it for jobs. Las Vegas has been reeling from a slump in
tourism revenue, as hotel-room occupancy rates have dropped,
pushing up unemployment in the region above the national
average.
Last week, the company reported it swung to a fourth-quarter net
loss on a $1.2 billion write-down, and the company said it saw
weakness in gaming and the economy in general in the first
quarter.
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 its debts. The company already won a waiver from
lenders of covenants on its senior credit facility through May
15.
MGM Mirage, which has 17 casinos in Nevada, Mississippi and
Michigan, and 50% stakes in four others in Nevada, New Jersey,
Illinois and Macau.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com