LAS VEGAS-Colony Capital is talking with MGM Mirage and Dubai World about a possible investment in CityCenter, according to a report late Wednesday in the Wall Street Journal that cites a person close to Los Angeles-based Colony. The multi-billion integrated resort on the Las Vegas Strip needs someone to put up another $800 million so developers can access the final $1.8-billion credit line that becomes available in May, allowing it to complete, open and initially operate the facility.
In 2006, Colony Capital paid $2.6 billion for a 75% share of Station Casinos,. Station said earlier this month that it is likely to file for protection from creditors under Ch. 11 of the US Bankruptcy Code. Last year, Colony offered approximately $850-million for the Tropicana Casino and Resort in Atlantic City, where affiliates own the Atlantic City Hilton Casino Resort and Resorts Atlantic City hotel/casino, the latter of which is at risk of foreclosure by lenders.
Late last week, MGM Mirage made a $200-million payment that satisfies the required sponsor equity contributions due on March 24 for CityCenter, the 67-acre integrated resort complex on the Las Vegas Strip that is slated to open in phases during the final three months of 2009. Half of the money was supposed to have been provided by Dubai World subsidiary Infinity World, but Infinity World sued MGM Mirage early last week in Delaware Chancery Court “to protect its rights and the best interests of the CityCenter project.”
The lawsuit alleges that MGM’s admissions of financial weakness in its annual report filed with the SEC last week constitute a breach of the CityCenter joint venture agreement that puts the multi-billion-dollar mixed-use development project at risk. Infinity World has 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.
“The current path of the project is simply unsustainable given our partner’s financial troubles,” Dubai World stated in announcing the lawsuit. “Ensuring completion of the project on acceptable terms is why Dubai World is [filing the lawsuit].”
Prior to covering the payment, MGM Mirage responded to the lawsuit , saying it 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 [and] is ready, willing and able to fund its share of the costs to complete CityCenter, including a required payment this week,” company spokesman Alan Feldman stated in an email. “We look forward to working with Dubai World to resolve any outstanding issues and complete this landmark project.”