The massive economic woes of MGM Mirage continued today as their partner in the City Center project sued them for "breach of the joint venture pact" that was agreed to in August, 2007. Dubai World's suit against the Vegas based company is asking to be relieved of it's agreement obligations and also seeks unspecified damages. The suit alleges that MGM Mirage mismanaged the City Center project which led to large cost overruns ; the alleged budget at the time of the signed agreement was roughly 7.5 billion and now cost estimates approach 9 billion. Additionally, the suit alleges that MGM MIrage has fallen short on it's total raised financing quota for the project. The casino company's total listed outstanding long term debt has been estimated at 13.5 billion.
In addition to it's debt load, the new lawsuit, and the generally sour tourism and gaming economy, MGM has had to fend off media questions regarding phone calls made by Senator Harry Reid (democratic senator from Nevada and House Majority leader ) to banks for purposes of raising financing for the company. The Republican senator from Nevada also made some calls for the same purpose. Why wouldn't they? MGM Mirage is one of the largest employers in their state and has contributed billions of dollars to the general economy and billions to the state in the form of tax revenue. It appears very reasonable that the elected representatives should make attempts to support companies such as MGM Mirage. Sometimes, the media can't look beyond their noses and take an opportunity to simply shut up.
Regarding MGM- Mirage solutions? I'm no economist or financial analyst but what option besides debt restructuring under bankruptcy filing and protection do they have? I can't see any alternative. Without a huge cash infusion I question the logic of City Center's completion in the current economy anyway. The numbers are just too large to consider anything besides a bankruptcy filing barring some massive cash infusion by an unknown sugar-daddy. Once debt is restructured the business might be able to retain current employees and dig their way out of the quagmire with some time and the eventual recovery of our general economy. I wish them good cards and an eventual return to normality.
USA Today - General feeds
2 days ago