MGM Mirage Faces Tough Sledding Despite Dubai Investment
MGM Mirage received permission from the Nevada Gaming Commission Thursday to sell a larger portion of the company to Dubai World. Dubai World, the financial arm of the Dubai government, already owns 9.4% of the casino and hotel operator.Under the proposed plan, Dubai may increase its stake in MGM to own as much as 20% of the business. Timing and price of shares for the deal have not been announced. MGM officials said market conditions would dictate when the deal would be consummated, but authorization is also needed by regulatory agencies in other states that MGM owns casinos in.
MGM Mirage also operates casinos in New Jersey, Illinois, and Macau. Dubai World also needs Nevada approval for a gambling license, so as to share in income from the CityCenter casino project currently under construction.
CityCenter is a major cause of the MGM Mirage decision to increase its partnership with Dubai. The condo-hotel-retail-casino complex has been desperately seeking financing to complete the building phase, and rumors of severe liquidity problems have floated around MGM Mirage.
Dubai purchased its original shares in August 2007 at $84 a share. The stock has plummeted since then, losing ninety percent of its value. Shares opened Thursday at $9.69. News of the imminent deal briefly sparked the stock, as it rallied late Thursday, and opened Friday almost fully recovered from the early Thursday losses. But it has faded as today has progressed, dropping below $9 a share.
