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MGM cuts it close, Dubai World cuts its ties
MGM Mirage dropped $200 million on its City Center project, in order to meet their payment due date of Friday. Had MGM missed this payment, it was likely that the project would be halted from construction and possibly fallen into bankruptcy.
So, why is this news? Well, half of the payment was supposed to be paid by their partner, Dubai World.
Don’t expect a payment coming from Dubai World anytime soon, however, as Dubai World is currently suing MGM, with allegations that MGM breached their terms of venture. MGM has said the suit is “completely without merit.”
The payment is somewhat surprising as leading up to today, many thought that MGM would miss the payment and the project would fall apart. Should the project crumble, not only will MGM feel a hit, but so will the thousands of workers that are depending on this project for a pay check.
MGM has said that they will work with Dubai World in order to find a solution, but clearly the problem lies in Dubai’s cooperation. Chairman and Chief Executive Jim Murren added, “We are doing our utmost to see that this project continues, keeping thousands of Nevadans employed. We will continue to make every effort to see that City Center is completed.”
This is another unfortunate example of how projects conceived during the gambling boom have come back around to bite the industry. Look to see the MGM Mirage sell more assets in its scramble to avoid this massive debt. The company already won a waiver from lenders of covenants on its senior credit facility through May 15.
MGM Mirage, which has 17 casinos in Nevada, Mississippi and Michigan, and 50% stakes in four others in Nevada, New Jersey, Illinois and Macau.
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hay
there its a strange news that a massive project is going to be at the edge of the bankruptcy
where is the problem appears in the planning or there is a breach of contract between the partners