Dubai Funding For CityCenter in Doubt

DUBAI, United Arab Emirates (AP) - The Dubai developer helping build the $8.6 billion CityCenter complex on the Las Vegas Strip said Monday it is suing struggling partner MGM Mirage amid concerns about the project's viability.

Dubai World said its Infinity World subsidiary filed the lawsuit in Delaware Chancery Court "to protect its rights and the best interests of the CityCenter project." Infinity contends recent statements by MGM Mirage about its ailing financial state constitute a breach of its joint-venture agreement and put the project at risk.

MGM Mirage is struggling under more than $13 billion in debt asit pushes ahead on CityCenter, its largest casino yet.Infinity is asking the court for unspecified damages and to relieve it of its obligations under the joint venture agreement. What that means in practice remains unclear, although the company's top lawyer insists Infinity wants to see CityCenter through.

"What we are attempting to do is complete this project," George Dalton, group general counsel for Dubai World, told reporters on a brief conference call in Dubai. He called the lawsuit "a very regrettable step," but said the state-owned company "actually had no choice."

Dubai World owns a 50 percent stake in the development and controls about 9.5 percent of MGM Mirage shares.

Asked whether Infinity was effectively seeking to end its joint venture with MGM Mirage, Dalton said: "It's difficult to say at this point."

"Were not saying MGM won't be involved," he added. "We're anxious to work with them, but we need to see them come out of their financial problems.

Dalton in particular cited concerns about a statement in MGM Mirage's recent annual report warning of a possible default on CityCenter that could in turn force it or the project to seek bankruptcy court protection.

He also questioned whether MGM Mirage has until the May 15 target it set itself to re-negotiate terms with lenders, saying there is "no certainty" the casino operator can continue to operate that long.

"Our concern is for the long term health of the project," he said. "We want to see some certainty (from MGM) before we continue with our obligations."

A spokesman for MGM Mirage did not immediately respond to a request for comment.

MGM Mirage Chief Executive Jim Murren has called the 67-acre development the company's top priority. The project includes six high-rise towers with a casino, boutique hotels, condominiums, entertainment and a retail mall. MGM Mirage has touted the project as the most expensive private commercial development in U.S. history.

MGM Mirage said last week that the openings of the various hotels and attractions on the site would come in stages.

Still, some analysts have questioned the profit-making potential of such a massive project - due to begin opening later this year - at a time when the U.S. economy is under severe strain.

"We believe that the completion of CityCenter, one of the world's largest and most expensive buildings, is coming on stream at precisely the wrong time for MGM, and in the wrong place," Citi analyst Anil Daswani said in a research note issued late Sunday.

MGM Mirage, which lost $1.15 billion in the fourth quarter of 2008 and $855 million for all of 2008, operates and owns all or part of 19 casinos in Nevada, Michigan, Mississippi, New Jersey, Illinois and Macau, the Chinese gambling enclave. The casino company made $1.58 billion in 2007.

The fourth-quarter loss was the first for MGM Mirage in 2008.
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Associated Press Writer Oskar Garcia in Las Vegas contributed
reporting.


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