Dubai World subsidiary sues MGM Mirage
Infinity World sues casino operator over breach of CityCenter contract
Dubai World subsidiary, Infinity World, has filed a lawsuit in the United States against MGM Mirage, its partner in the Las Vegas CityCenter project.
Infinity World said it had filed the lawsuit in Delaware Chancery Court to “protect its rights and the best interests of the CityCenter project”, saying that the casino operator had breached the terms of its joint venture agreement by approaching the Securities and Exchange Commission (SEC) earlier this month.
MGM Mirage made the disclosure on March 17, warning it had "substantial doubt about our [MGM Mirage’s] ability to continue as a going concern" – putting the future of the US $8.8 billion CityCenter project in doubt.
Dubai World said that MGM's disclosure that it could not provide assurance that it will be able to meet its future payment obligations to CityCenter had left it no other option but to act to “protect its investment and the future of CityCenter.”
“The current path of the project is simply unsustainable given our partner's financial troubles,” the company said in a statement.
In response MGM Mirage released a statement today that said: "Dubai World is well aware of our written commitment to meet our funding obligations and that MGM Mirage has available cash to satisfy those obligations.
"MGM Mirage is ready, willing and able to fund its share of the costs to complete CityCenter, including a required payment this week.
"We look forward to working with Dubai World to resolve any outstanding issues and complete this landmark project."
MGM is struggling under more than $13 billion of debt.
In its court filing yesterday, Infinity World asked for a declaratory judgment and other measures that would relieve it of its obligations under the joint agreement, resulting from MGM's breach.
CityCenter is a mixed-use luxury residential, resort and retail complex being developed by MGM on the Las Vegas Strip. It is owned by CityCenter Holdings LLC, a joint venture equally owned by MGM and Infinity World. The complex, scheduled to open in late 2009, has been under construction since 2005.
Dubai World added that MGM had “mismanaged the CityCenter project, resulting in costs significantly over budget despite downsizing certain of the facilities.”
“This has caused Infinity World to make capital contributions far in excess of the levels originally estimated by MGM,” the company said.