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MGM Mirage, Dubai World reach deal to finish CityCenter

The casino operator says it will complete the $8.5-billion casino complex on the Las Vegas Strip and that its partner, the investment arm of the Dubai government, will drop a suit against the company.

April 30, 2009|Associated Press

LAS VEGAS — Casino operator MGM Mirage said Wednesday that it agreed with partner Dubai World and the pair's lenders to finish an $8.5-billion casino complex on the Las Vegas Strip.

MGM Mirage said Dubai World, the investment arm of the Dubai government, would drop a lawsuit it filed against the Las Vegas-based casino company, which is majority owned by investor Kirk Kerkorian.

The pact secures MGM Mirage's payment obligations for construction costs with its Circus Circus Las Vegas casino and adjacent land. The company said CityCenter is now on track to fully open by December.

MGM Mirage, which has been struggling under more than $13 billion in debt, also said it reached a separate agreement with its own lenders to waive its payment obligations until June 30, extending a prior agreement by 45 days.

MGM Mirage Chief Executive Jim Murren said the extension gave the company "more than enough time" to come up with a comprehensive plan to fix its balance sheet.

To get the extension, MGM Mirage paid back $100 million under its revolving credit facility and secured $300 million of its debt with its Gold Strike Tunica casino in Mississippi and undeveloped land on the Las Vegas Strip. It also put up its MGM Grand Detroit casino as collateral for the rest of its credit facility.

All the deals are subject to approval by gambling regulators, the company said.

MGM Mirage received what it called an irrevocable letter of credit for $224 million to secure its payments for CityCenter, which the casino company has touted as the most expensive private commercial development in U.S. history.

As part of the deal between the partners, Dubai World agreed to repay $135 million in construction costs it owed that MGM Mirage has paid on its behalf. Under that pact, MGM Mirage also agreed to pay any completion costs if the project goes over its current projected budget of $8.5 billion.

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