MGM Mirage Calls Dubai World Suit 'Without Merit'

"The lawsuit filed yesterday by a subsidiary of Dubai World is completely without merit," company spokesman Alan Feldman stated in an email. "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 [and] is ready, willing and able to fund its share of the costs to complete CityCenter, including a required payment this week. We look forward to working with Dubai World to resolve any outstanding issues and complete this landmark project."CityCenter is a mixed-use luxury residential, resort and retail complex being developed by MGM on 67 acres between the Bellagio and Monte Carlo resorts on the Las Vegas Strip. It is owned by CityCenter Holdings LLC, a joint venture equally owned by MGM and Infinity World. The complex, scheduled to open in late 2009, has been under construction since 2005.

In its annual report filed last week MGM said that it "cannot provide assurance" that its business would generate sufficient cash flow–or that future borrowings would be available—to pay its indebtedness or to fund its other liquidity needs. As a result, MGM Mirage said there is "substantial doubt" about the company's ability to continue as a going concern.

In its court filing, Dubai World subsidiary Infinity World asked for a declaratory judgment and other measures that would relieve Infinity World of its obligations under the joint venture agreement resulting from MGM's breach. MGM and Dubai World have $500 million to fund before a $1.8 billion bank facility becomes available in May, allowing them to complete and open the project.

"The current path of the project is simply unsustainable given our partner's financial troubles," it said. "Ensuring completion of the project on acceptable terms is why Dubai World is [filing the lawsuit]."