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CR79-p01-News 1:SJC-Casino Review 19/4/09 01:20 Page 1 • May 2009 • 079
Taiwan is Two: Up In Smoke: Multi-Talented:
Only two The real effect Who’s doing
licences for of bans in what with
first 10 years Europe Multi-Players
Waiver eases CityCenter
stand off but for how long?
Towering over the rest of Las Vegas’ sprawling
hotels, CityCenter was original pitched as the
gambling city’s gateway to the future. Its
unique mix of apartments and gaming would
bring real life to the Strip like never before. But
given the snowballing effects of the credit
freeze, CityCenter has become a reluctant icon
of the Strip’s struggles long before it is
completed. Phil Martin reports on the
project’s latest pitfalls and pardons.
waveafterwaive and residential CityCenter devel-
UNITED STATES opment as well as 9.5 per cent of
MGM Mirage shares.
A month which began with Dubai World confirmed the
MGM Mirage struggling to payment was ‘a sign of good
bankroll CityCenter’s spiralling faith and of MGM’s commit-
cost and with partners Dubai ment’ and that it would give
World threatening to sue and CityCenter’s board more time
place the project under bank- to work out a restructuring.
ruptcy, ended with the US$8bn It added that the waiver pro-
Las Vegas project winning vided by lenders was ‘an accept-
something of a reprieve. MGM able, albeit temporary, solution
Mirage has kept its senior to the liquidity issues that MGM
lenders at bay by committing Mirage is facing, which are at
$200m to allow construction the heart of the lawsuit.’
to continue while it seeks addi- In that complaint, Dubai we continue with our obliga- ings, is coming on stream at pre- ulators are developing a team of this year. Station Casinos has
tional finance elsewhere. World’s Infinity World unit said tions. We’re not saying MGM cisely the wrong time for MGM, securities experts and auditors extended a deadline to arrange a
It also moved to quash any MGM had mismanaged the con- won’t be involved. We’re and in the wrong place.” to oversee casino bankruptcies restructuring plan. Harrah’s has
suggestions of a fall out with struction of CityCenter and anxious to work with them, but Some analysts, meanwhile, and debt restructurings. been granted an extension on
its partners in the project. added that further increases in we need to see them come out believe that the suit presented State Gaming Control Board some repayments, whilst Riviera
“MGM Mirage intends to the cost of the project appeared of their financial problems.” by Dubai World is an indication Chairman Dennis Neilander Holdings will miss a $4m inter-
work with Dubai World, its likely. The catalyst for the suit MGM Mirage now needs a that it wants a greater share in said: “Unfortunately, Nevada est payment and could be
lenders and others to find a long- was a statement in MGM Mirage’s further $800m to access a $1.8bn the project. gaming and tourism have not heading into real trouble.
term solution for the financing annual report which warned it credit facility which would allow Adam Cohen, of research firm been spared consequences of Despite this, MGM retains most
of CityCenter’s completion,” could default on its loans for it to fund the completion of City- Covenant Review, said: “Maybe the ongoing economic chal- analytical interest due to the size
MGM said in a statement. CityCenter which might force it Center, but in the midst of this it gives Dubai World leverage, lenges facing the country. of its current project.
The united front was in com- to seek bankruptcy court pro- current recession hopes of and they want to control much Already, there are a few large The timing of CityCenter
plete contrast to that promoted tection. Infinity World wants funding are slim. more than half of this joint gaming companies in bank- couldn’t be worse. Its mini-
earlier in the month when Dubai unspecified damages and to free Colony Capital and Australian venture when it’s all over. When ruptcy, along with a few smaller metropolis of condominiums,
World filed a suit against MGM in itself from its obligations under operator Crown both denied you file a lawsuit that charges licensees. More are anticipated.” hotels, shops and casinos in the
Delaware Chancery Court the venture. they were about to offer a solu- mismanagement and a breach The recession has been at its heart of the Strip, is scheduled to
demanding to be relieved of its Dubai World’s general tion to the funding freeze. Ana- of fiduciary duty, how do you most unforgiving in Nevada open in phases beginning late in
commitments to CityCenter. Half counsel, George Dalton, said: lysts believe that rescue packages have a refinancing discussion where Herbst Gaming is to relin- 2009. A fully operational City-
of the $200m put forward by “What we are attempting to do will be few and far between. with that kind of talk?” quish control of its casinos while Centre would dwarf the rest of
MGM should have been fronted is complete this project. Our Citi analyst Anil Daswani said: Following concern over a pos- it restructures its debt in bank- the Strip’s casinos. If it that
by Dubai World. The Middle concern is for the long term “We believe that the completion sible bankruptcy at MGM Mirage ruptcy. Tropicana Entertainment doesn’t happen, it would signal
Eastern entity owns a 50 per cent health of the project. We want of CityCenter, one of the world’s as well as several other major hopes to emerge from bank- Las Vegas’ biggest ever failure.
stake in the casino, hotel, retail to see some certainty before largest and most expensive build- operators, Nevada’s gaming reg- ruptcy court protection later The stakes are that high.
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