MGM Mirage Casino Project Forced to Brink by Dubai World
A payment of $220 million to lenders for the CityCenter casino gambling complex construction is due today, and default may be imminent. While MGM Mirage swears it is prepared to pay its half, partner Dubai World has sued the casino operator and says it will not pay its share.
MGM Mirage's lenders, including Bank of America, have said they will not allow MGM Mirage to make its payment if Dubai fails to honor its share of the debt. The dispute could send the CityCenter albatross into bankruptcy as soon as this weekend.
The potential work stoppage at the monstrous resort project could send ripples throughout the Las Vegas economy. MGM Mirage has already been hunting unsuccessfully for more than a billion dollars in financing to complete construction. Now Dubai's suit, alleging breach of contract by MGM Mirage, makes Las Vegas insiders wonder if CityCenter will drag down the MGM empire with it.
Thousands of jobs are dependent on CityCenter's moving forward. In a depressed Las Vegas economy, unexpected unemployment of more than ten thousand operating personnel would be a devastating blow.
Long-time Vegas observer Henry Ebanks says MGM Mirage will not exist in its current form for much longer. Restructuring of debt to rework credit covenants will save the company, but in a much smaller version, as several properties will likely be sold.
"For Las Vegas visitors, the result of the recession may be a return to more individual ownership of casinos, rather than MGM or Harrah's owning everything. The presence of increased competition can only make for a better tourist experience."
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