MGM Mirage: CityCenter funding nearly complete - 6th August 2008
Shares in MGM Mirage surged Tuesday after the company said it secured commitments for $1.65 billion of the final $3 billion in financing for its next major casino project on the Las Vegas Strip.
The company said last week that a deal was delayed because of tight financial markets. Company officials had expected the deal to be in place in June or July, but on Tuesday said it would be done in the third quarter.
MGM Mirage shares leaped $4.85, or 15.7 percent, to close at $35.85 the same day the company reported a second-quarter profit fall of 68.6 percent. The stock has ranged from $21.65 to $100.50 over the past year.
Chief executive Terry Lanni told The Associated Press that MGM Mirage and partner Dubai World were able to hold out for better interest rates by paying for construction costs themselves – about $200 million per month since November, when Dubai World bought into the project.
"That’s an advantage that we had – we weren’t forced to accept terms that we just didn’t think were necessarily ones that were the most reasonable and advantageous," Lanni said. "And by taking more time, and seeing how the economy now – at least here in Las Vegas – has not fallen off the cliff as some people have suggested, we’ll be in far better position."
Dubai World, the investment arm of the Persian Gulf state of Dubai, spent almost $5 billion to buy half ownership in CityCenter and acquire 9.4 percent of MGM Mirage.
Lanni said CityCenter, which is scheduled to open in late 2009, would benefit from other projects being delayed or scrapped because it would let the complex open without anything on its heels.
Last week, Boyd Gaming said it would delay construction of its $4.8 billion Echelon project on the Las Vegas Strip until economic conditions improve. Before the delay, Boyd officials had planned to open the Echelon in the second half of 2010.
"I think this is better timing. I think there was too much coming down the pipeline at the same time," Lanni said. "I think it’s very advantageous for us that none of this is going to all occur at the same time."
CityCenter – which MGM Mirage officials have called the most expensive private commercial development in U.S. history – is expected to include six high-rise towers with a 4,000-room hotel-casino, condominiums, boutique hotels and a retail, dining and entertainment complex.
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