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MGM Mirage makes $200 million equity payment

March 28, 2009|Associated Press

MGM Mirage threw a lifeline to its $8.7-billion CityCenter casino project in Las Vegas, agreeing Friday to make a $200-million equity payment that includes the portion owed by its partner, Dubai World.

The casino giant, which is majority-owned by billionaire Kirk Kerkorian, was allowed to cover Dubai World's obligation under a waiver granted Friday by the project's senior lenders.

The payment buys MGM Mirage time to work through a funding crisis amid a slowdown in gambling revenue.

Some construction workers were told Friday to pack their tools by the end of the day, but MGM Mirage said the move should allow work to continue on the 67-acre hotel, retail, residential and casino complex on the Las Vegas Strip.

CityCenter, in which MGM Mirage and Dubai World are equal partners, is to start opening in stages later this year. But its funding remains uncertain.

The partners must contribute $800 million more in equity to access a $1.8-billion credit facility that will complete funding for the project, MGM Mirage said.

"We will continue to make every effort to see that CityCenter is completed," Chief Executive Jim Murren said.

The payment is one of many moves MGM Mirage has made this year to stave off serious financial problems, including the sale of its Treasure Island casino to businessman Phil Ruffin for $775 million.

Credit rating agencies, Dubai World and securities analysts remain worried about the future of MGM Mirage, which owes more than $13 billion and lost $1.15 billion in the fourth quarter of 2008.

A lawsuit filed this week by Dubai World subsidiary Infinity World claims that MGM Mirage's financial condition has put the CityCenter project at risk.

MGM Mirage shares fell 24 cents, or 7.8%, to $2.85.

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