Las Vegas CityCenter project back on track
MGM Mirage makes a $200mn payment, allowing construction work to continue
The US $8.7 billion CityCenter project in Las Vegas, being jointly developed by hotels and casinos operator MGM Mirage and Infinity World, a unit of Dubai World, the Dubai government's investment arm, has avoided a bankruptcy filing and potential shutdown, for now.
The news came after it was confirmed that MGM Mirage made a $200 million funding payment, Friday, allowing construction work to continue on the 67 acre site situated between the Bellagio and Monte Carlo hotels.
The payment, which was approved by the company's senior lenders, included $100 million that was due to be paid by Infinity World.
Construction is now assured for at least another month pending discussion of a potential Chapter 11 bankruptcy reorganisation. A bankruptcy would have halted work on the complex, which was first announced in 2004 and is expected to begin opening in October. CityCenter currently employs some 8,500 construction workers.
In a statement MGM Mirage Chairman and CEO Jim Murren said "We are doing our utmost to see that this project continues.
"We will continue to make every effort to see that CityCenter is completed and becomes an even greater economic driver for the region."
The latest payment leaves $800 million remaining to be funded by the CityCenter partners before a $1.8 billion credit facility can be accessed to pay additional construction costs.
MGM Mirage and Dubai World still need to raise $1.2 billion to complete CityCenter.
Last Monday Dubai World issued a lawsuit against MGM Mirage after MGM Mirage, in filings to US regulator, the SEC, said ''there is substantial doubt about our ability to continue as a going concern."
MGM also said it could not provide assurances that its business would generate sufficient cash flow from ongoing operations or that future borrowings would be available to it under its senior credit facility in an amount sufficient to enable it to pay its indebtedness or to fund its other liquidity needs.
In its lawsuit Dubai World asked for a declaratory judgment and other measures that would relieve it of its obligations under the joint venture agreement resulting from MGM's breach.
Dubai World said MGM's disclosure that it could not provide assurances that it would be able to meet its future payment obligations to CityCenter ''left it no other option but to act to protect its investment and the future of CityCenter.''