01 December 2009

CityCenter rolls the dice on future of Vegas

Las Vegas’ largest casino owner is gambling its losing streak will end with the unveiling of the $8.5 billion CityCenter resort.

CityCenter involves 67 acres of hotels, condominiums, gambling and shopping linked by a monorail. It opens just as Las Vegas’s two-year recession seems to be easing.

The cost, along with the global credit crunch, drove MGM Mirage stock to less than $2 in March and forced a share sale that loosened founder Kirk Kerkorian’s control, reported Bloomberg News. And the project’s co-owner, state-owned Dubai World, added a new twist when it recently sought to delay payment on its own debts.

"We already have all our money" to open, MGM Chairman and chief executive Jim Murren, said in an interview with Bloomberg. "All the cross-defaults were eliminated. If we have a default at either parent it could not trigger a default at the joint venture."

Murren wants to pare long-term debt to $10 billion within five years and raise MGM Mirage’s credit rating, said the news service.

The Las Vegas-based company also reportedly plans to sell stock in its Macau, China, venture next year and has assets that may serve as collateral for additional refinancing.

With $1.8 billion in debt, CityCenter may support more loans once it opens.

"Down the road if they want to try and take it public, or try and recapitalize the entity, it could send cash out to both parties," said Dennis Farrell, a debt analyst at Wells Fargo Securities LLC.

Dubai World, an investment company for the Persian Gulf emirate, is trying to delay payments on $59 billion of liabilities. Should it seek to sell its interest in CityCenter, MGM Mirage has first right of refusal to buy out its partner, corporate filings show.

The global credit crisis and recession almost cut off CityCenter construction funding.

Murren, a former Wall Street analyst, says CityCenter’s "neighborhood" of unique architecture, art and dining will be a must-see for tourists and locals, giving MGM Mirage a greater share of visitors’ spending.

"We will get our rightful majority share of that incremental revenue," Murren said to reporters in Las Vegas. "We’ve developed the thing that everyone has to see."

Travel to the city will rise 7 percent to at least 38 million visitors in 2010, Murren said.
An official grand opening is scheduled for Dec. 16.

By David Wilkening