MGM Mirage Hit with Lawsuit by Dubai World
The CityCenter complex under construction on the Las Vegas Strip has been a debacle since first begun by a partnership between MGM Mirage (MGM: 11.75 0.00%) and Dubai World. Now, Dubai World contends MGM Mirage has broken the contract between them, and is suing for control of the development.
Dubai alleges that MGM statements concerning potential default and its cash-short position leave the casino operator unable to meet the requirements necessary to finish and run the CityCenter.
Dubai purchased half of CityCenter when the two companies were planning joint operations around the globe. MGM Mirage wanted to open non-gambling hotels in Arab countries, and Dubai needed someone to wash the gambling stigma off Las Vegas dollars.
But now economic troubles have caused a rift. MGM Mirage has been scrambling for the $1.2 billion financing needed to finish CityCenter. And Dubai borrowed heavily against future oil sales, only to see the price of oil plummet with the rest of the market.
MGM Mirage CEO Jim Murren had just termed his company’s relationship with Dubai as ‘outstanding” in a presentation last week. A spokesman for the gaming company responded to the lawsuit, calling it without merit.
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