WAIVER HELPS TROUBLED MGM MIRAGE
MGM Mirage won a waiver from lenders to pay about $70 million on its CityCenter project without partner Dubai World, staving off for now a possible bankruptcy filing by the development.
The accord extends last month’s agreement letting MGM Mirage pay both partners’ obligations, two people familiar with the accord said Friday. They declined to be identified because the negotiations are private. MGM Mirage, the largest casino operator on the Strip, faced a Monday deadline to win approval from the banks to make both payments.
An MGM Mirage spokesman in Las Vegas, downplayed the latest report, telling the Review-Journal there has been no official notice of a deal being in place.
“We’ve made no announcement,” MGM Mirage spokesman Gordon Absher said.
“We continue to work with our lenders and our partners to find a solution to our financial situation,” Absher said.
The report of a waiver came at the end of a day that included myriad reports by anonymous sources that had major investors leaving discussions, then re-entering.
The closed-door talks are of high interest in Las Vegas, where 8,500 construction jobs and another 10,000 hospitality positions are riding on the successful continuation of CityCenter.
Dubai World has submitted a proposal to MGM Mirage and the banks involved in the CityCenter joint venture that may see it resume payments to finish the still-under-construction project in exchange for concessions, one of the people said, declining to provide details of the plan.
“We cannot comment on specifics of our discussions but we continue to be fully committed to completing CityCenter and we continue to work with our partners and the lenders to seek a solution,” George Dalton, Dubai World’s general counsel, said Friday in an e-mailed response to questions.
The Las Vegas-based casino company controlled by 91-year-old Kirk Kerkorian needs the approval of banks to cover Dubai World’s CityCenter payments, keeping the Strip project out of bankruptcy and letting construction continue. Dubai World, the state-owned investment company, is suing MGM Mirage to be freed from further CityCenter funding obligations.
“We have already contributed $4.3 billion, and we are standing ready to commit more money to see the project finished once we are sure our partners and the lenders will also commit, and there’s certainty about the future viability of MGM Mirage,” Dalton said. “This is in the interests of everyone.”
MGM rose 55 cents, or 12 percent, to $5.30 Thursday in New York Stock Exchange composite trading. The shares have more than doubled this month. Under a two-month waiver MGM Mirage won from its corporate banks in March, the partners were required to split construction costs. That expires on May 15.
Bank of America is the administrative agent on MGM Mirage’s senior credit facility and is leading negotiations. Shirley Norton, a spokeswoman for Bank of America, didn’t immediately respond to a request for comment.
The biggest project on the trip, CityCenter represents MGM Mirage’s largest expansion. The development, which includes a casino, hotels, apartments and malls, is due to open in December amid a global recession that led to the city’s biggest gambling decline on record last year.
In its Delaware Chancery Court complaint, Dubai World alleged MGM Mirage violated terms of their partnership, citing cost overruns on CityCenter and MGM Mirage’s inability to borrow or guarantee it can remain a going concern.
The equal partners had agreed to fund “just under” $500 million each to fill a construction-payment shortfall until a $1.8 billion bank facility becomes available in June, MGM Mirage Chief Executive Officer James Murren said on a March 17 conference call.
Review-Journal writer Benjamin Spillman contributed to this report.
