- The Washington Times - Friday, March 27, 2009

LOS ANGELES (AP) - MGM Mirage Inc. threw its $8.7. billion CityCenter casino project in Las Vegas a lifeline Friday, agreeing to make a $200 million equity payment that includes the portion owed by its partner, Dubai World.

The casino giant, which is majority-owned by billionaire Kirk Kerkorian, was allowed to cover Dubai World’s obligation under a waiver granted Friday by the project’s senior lenders.

The payment buys MGM Mirage time to work through a funding crisis amid a slowdown in gambling revenue in Las Vegas.

Some workers were told Friday to pack their tools by the end of the day, but MGM Mirage said the move should allow construction to continue on the 67-acre hotel, retail, residential and casino complex on the Las Vegas Strip.

CityCenter, in which MGM Mirage and Dubai are equal partners, is to start opening in stages later this year. But its funding remains uncertain.

The partners must contribute $800 million more in equity to access a $1.8 billion credit facility that will complete funding for the project, MGM Mirage said.

“We will continue to make every effort to see that CityCenter is completed,” Chief Executive Jim Murren said in a statement. “We continue to review with our partners all possible options to keep CityCenter fully funded and on a path to completion.”

Fitch Ratings analyst Michael Paladino said MGM Mirage’s move keeps the project afloat for now.

“Now it’s back to the negotiating table with the lenders and Dubai World,” he said.

Paladino said his “C” corporate credit rating on MGM Mirage, the lowest before a default rating, wasn’t likely to improve.

The payment is one of many moves MGM Mirage has made this year to stave off serious financial concern, including finishing the sale of its Treasure Island casino to businessman Phil Ruffin for $775 million last week.

Ratings agencies, its partner in the CityCenter development and securities analysts remain worried about the future of MGM Mirage, which owes more than $13 billion and lost $1.15 billion in the fourth quarter of 2008.

It has struggled for months to secure the financing to finish the CityCenter project, which is providing thousands of construction jobs and is expected to offer 12,000 permanent jobs.

Soon after it reported last week that its auditors doubt its ability to continue as a going concern, MGM Mirage won a waiver from the terms on some of its debt, giving it until May 15 to fix its finances.

But Moody’s Investors Service quickly lowered MGM Mirage’s credit rating because it was only a short-term waiver, and a Dubai World lawyer later said the company might not last through mid-May.

Fitch Ratings downgraded MGM Mirage’s Issuer Default Rating several days later to the lowest possible junk rating and wrote in a statement that default seemed inevitable.

And a lawsuit from Dubai World subsidiary Infinity World claims the company’s financial condition put the CityCenter project at risk.

Infinity World said MGM Mirage had breached a joint venture contract on CityCenter, and it blamed MGM Mirage for mismanagement and cost overruns on the project.

MGM Mirage officials have said the lawsuit is “completely without merit.”

Despite the lawsuit, general counsel George Dalton told reporters Monday that the company wants to see CityCenter completed.

MGM Mirage spokesman Alan Feldman said Dubai World agreed to have its portion of the equity payment due Friday covered. Feldman would not elaborate.

Dubai World has a 9.4 percent stake in MGM Mirage and owns 50 percent of the CityCenter project.

Shares in MGM Mirage dropped 24 cents, or 7.8 percent, to close at $2.85 on Friday after being temporarily halted on the New York Stock Exchange pending an announcement. Earlier in the day, the shares had hit a low of $2.51.


Associated Press Writer Ken Ritter in Las Vegas contributed to this report.

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