LAS VEGAS (AP) - Nevada gambling regulators gave approval Thursday for investment firm Dubai World to acquire a bigger stake
in MGM Mirage Inc., a move the casino company's leader-in-waiting
said will help it survive a "paralyzed" global economy.
Jim Murren, the chief operating officer of MGM Mirage who will replace Terry Lanni as its chief executive Dec. 1, said partnering with Dubai World would help MGM Mirage navigate current conditions that have been tough on consumers and borrowers. Lanni announced last week that he was retiring after more than 13 years at the helm of the world's second-largest casino company and the largest gambling operator on the Las Vegas Strip.
"We are in troubled times and this is a time, we believe, to face our challenges very quickly," Murren said. "We have a crisis of confidence in the consumer."
The plan approved by the Nevada Gaming Commission authorizes the
investing arm of the Dubai government to increase its current 9.4
percent stake to as much as 20 percent of the gambling company.
"This is a very long-term investment," said Lai Boon Yu, group chief investment officer for Dubai World. "We have many plans to work with our friends."
Dubai World and MGM Mirage already are partners in the largest private commercial development in U.S. history, the $9.2 billion CityCenter complex on the Las Vegas Strip scheduled to open next year.
Yu said the timing for Dubai World to buy the additional shares was not set. The firm owns just more than 26 million shares of MGM Mirage stock.
"It is not a question of if," Yu said. "When depends on market conditions."
Dubai World agreed to buy its current shares of MGM Mirage stock at $84 per share in August 2007. The price was 13 percent above the
stock's trading price that day.
MGM Mirage stock has tumbled more than 90 percent over the past year, from a 52-week high of $93.19 to a closing price of $8.79 on Thursday. MGM Mirage stock dropped $1.41, or 13.8 percent, in Thursday trading.
Dubai World still needs permission from regulators in other jurisdictions to raise its stake to 20 percent, and approval for a Nevada gambling license to share in CityCenter's casino profits. The firm applied for the license in April.
MGM Mirage owns and operates 17 properties in Nevada, New Jersey, Illinois and Macau. It has 50 percent partnerships in four other properties. In Las Vegas, the company owns 10 casino-hotels on the Las Vegas Strip, including Bellagio, Mandalay Bay and The Mirage.
Murren said that besides guiding CityCenter to success, MGM Mirage has to conserve cash and motivate tourists to end their spending slump.
"It is our job to husband cash and to right-size the company and to create as much efficiency as possible," Murren said. "In many cases that's painful to do but it's utterly critical to maximize our cash flow right now to weather the storm."
(Copyright 2008 by The Associated Press. All Rights Reserved.)