DOW JONES NEWSWIRES
MGM Mirage (MGM) paid $70 million, including the 50% owed by
partner Dubai World, to ensure that construction continues at its
CityCenter development in Las Vegas.
The payment, the second in three weeks that covers both parties'
obligations as they battle their relationship in the courts, comes
as MGM tries to avoid pressure have the $8.6 billion development -
and possibly the company itself - file for bankruptcy to
restructure debt.
MGM got some breathing room from lenders Monday when it amended
its senior credit facility, giving it the ability to pay the
construction costs.
Shares were recently down 9.5% at $5.34. The stock is off 61% so
far this year despite a rebound in the past month.
The $8.6 billion Las Vegas Strip resort and casino development
is in danger of shutting down because of financing woes and the
dispute between the project's partners. MGM was sued last month by
Dubai World, which alleges the troubled casino operator breached
the terms of their venture. Dubai World has blamed MGM for massive
cost overruns on City Center.
MGM Chief Executive Jim Murren said Friday that the company
remains dedicated to finishing the project and that it is
continuing discussions with lenders.
Two high-profile investors have each bought up hundreds of
millions of dollars of MGM bonds and have told the troubled casino
giant it should quickly overhaul its massive debts in bankruptcy,
people familiar with the situation told The Wall Street
Journal.
An MGM bankruptcy would be the most spectacular in a string of
implosions in the casino industry, which has been slammed by
collapsing Las Vegas property values and a downturn in consumer
spending and travel. Several small casino companies have either
entered bankruptcy protection or are flirting with it. Others are
slashing costs and struggling to cut massive debts incurred for
expansions and buyouts.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com