CityCenter Soldiers on as MGM Secures More Funding

Despite the challenging lending market and financial hurdles that led to a recent lawsuit, MGM Mirage has soldiered on in its pursuit to rake in financing to continue construction of its $8.8 billion CityCenter project (pictured) on the Las Vegas Strip. The firm has secured an amendment of its credit facility, thereby paving the way for the company to pay the $70 million in construction costs due for the 18 million-square-foot mixed-use development no later than April 17. “Payment is due on Friday and the waiver allows the payment to be made,” a company spokesperson told CPN. Amendment of the credit facility through MGM Mirage’s senior lenders also enables the company to finance joint venture partner Dubai World’s $35 million share of the payment, if necessary. “We’re now in a position to make their payment if they should choose not to, so workers have no concerns about things coming to a halt,” he said. CityCenter’s vast list off offerings will include the 61-story Aria, which will provide 4,000 guestrooms, 150,000 square feet of gaming space and a choice of restaurants; the 400-room Mandarin Oriental Hotel & Residences with 400 guestrooms and 227 residential units; the 1,495-room Vdara condo-hotel; the 670-residence Veer Towers; and the 500,000-square-foot Crystals retail and entertainment district. It is not yet clear if Dubai World will put forth its share of the upcoming payment. Dubai World made public its issues regarding the financing of CityCenter in March with the announcement of a lawsuit against MGM Mirage. The U.A.E.-based entity, a 50-50 partner with MGM Mirage in the joint venture development entity City Center Holdings L.L.C., took legal action in hopes of securing from the court a declaratory judgment that would relieve it of its commitments under the joint venture agreement. Dubai World claimed the suit was prompted by MGM Mirage’s annual report, which documented MGM Mirage’s concerns about its ability to sustain itself as a company. At the time of the filing of the lawsuit, Dubai World had shelled out $4.3 billion for CityCenter. Dubai World also accused MGM Mirage of having mismanaged the development, despite the fact that MGM Mirage, in its annual report, remarked that financing for CityCenter had been hindered in 2008 by the inhospitable lending environment. In response to Dubai World’s legal action, another MGM Mirage spokesperson shared in an email to CPN at the time that the lawsuit is without merit. “Dubai World is well aware of our written commitment to meet our funding obligations and that MGM Mirage has available cash to satisfy those obligations,” the spokesperson added. “MGM Mirage is ready, willing and able to fund its share of the costs to complete CityCenter.” Indeed, MGM Mirage is keeping CityCenter going, bit by bit. Last month, the company made a $200 million payment to the joint venture. The funding included $100 million that, MGM Mirage noted in a press release, should have been paid by Dubai World. So, the show goes on. “We anticipate opening late 2009,” the spokesperson said. “Construction continues and we are continuing to pursue financing for the project.”