Gibbons, Perini to meet

Gov. Jim Gibbons will meet with Perini Building Co. and its sub­contractors to discuss claims that MGM Mirage owes money for work completed on CityCenter, a spokesman for the governor's office confirmed late Saturday.

Perini sent a nine-page letter on Tuesday asking the governor's office to investigate why MGM Mirage is not paying more than $500 million the builder claims it and its nearly 600 subcontractors are owed.

It is not known if MGM Mirage is invited to the meeting or has requested a separate meeting with the governor.

MGM Mirage did not responded to a Sunday request for comment by press time.

Perini Building Chief Executive Officer Craig Shaw said Sunday the company is referring inquiries about the meeting to the governor's office for now.

Perini said in its letter that MGM Mirage has paid $5.79 billion of the $6.29 billion construction contract, but is withholding the remainder for various reasons. Of the nearly $500 million owed, Perini said $400 million is due the sub­contractors, $40 million of which is for small minority- and women-owned businesses.

The meeting will be held May 21.

In March, Perini filed a lawsuit in Clark County District Court and a master lien of nearly $500 million on the project. Many subcontractors continued to file individual liens against CityCenter through last week.

Perini also launched a coalition last week consisting of the subcontractors as well as a few local unions. It has Twitter and Facebook pages, designed to cast a public spotlight on what the builder said is the devastating impact nonpayment is having on the project's recession-racked contractors.

"MGM's actions are having an impact on our business, as we've had to cut back employees and ask staff to take a pay cut, which they agreed to," said Giroux Glass President Anne-Merelie Murrell, a CityCenter subcontractor who is owed $7.5 million.

"We are determined to ride this out and to overcome the adversity that MGM has caused. We believe we will be paid by MGM because we completed the work on time as promised. But when and at what lasting sacrifice?"

MGM Mirage has yet to respond to the lawsuit.

MGM Mirage Chairman and CEO Jim Murren told the Review-Journal on Thursday he understands his company is facing the brunt of the criticism over the disputed payments, which has left hundreds of small contractors and firms on the short end.

"People are upset and we empathize with them," Murren said.

"It's an un­fortunate situation, which is why we offered to take this to arbitration so it could be resolved quickly. We have a very different position than Perini has, and that will be fully fleshed out in court. We have taken the high road and they have resorted to theatrics in the media to express their point of view."

Perini's letter to the governor expresses concern about what the builder believes is the gaming company's deteriorating financial position as for a reason the company is not paying its bill.

MGM Mirage posted a net loss of $96.7 million in the first quarter ended March 31, a Friday filing with the Securities and Exchange Commission shows. Nearly $11.4 million of that loss came from operations. Revenues dropped 2.7 percent while expenses increased nearly 20 percent.

At CityCenter, which MGM Mirage owns 50 percent and operates, the 4,004-room Aria reported an operating loss of $66 million, which included a depreciation expense of $54 million, on revenues of $160 million. CityCenter's nongaming properties, Vdara Hotel and the Mandarin Oriental reported $10.1 million in combined negative cash flow.

The company has $12.7 billion in long-term debt including $781.8 million due this year and another $1.6 billion due in 2011.

The company paid an estimated $868 million in interest expense in the quarter, according to Andrew Zarnett, who follows the hospitality industry's debt markets for Deutsche Bank.

Zarnett said in a Friday note to investors he estimates MGM Mirage has $1.5 billion available under a credit facility and a cash balance of $990 million.

While the economy has hit the gaming industry hard, it has also ravaged the construction industry.

Construction had a 30 percent un­employment rate in Southern Nevada in March, according to the Nevada Department of Employment, Training and Rehabilitation. It's a dramatic reversal from a few years ago when construction was the state's second largest and fastest growing employer.

Tutor-Perini, which owns Perini Building Co., posted a first quarter profit of $20.9 million, down 46.3 percent from the same period last year. Quarterly revenues dropped 43 percent to $865.1 million. The company's debt load is $87.7 million with a $1.5 million debt payment in the first three months of the year.

Contact reporter Arnold M. Knightly at aknightly
@reviewjournal.com or 702-477-3893.