Dubai World and MGM Mirage have reached agreements resolving disputes between one another and with the lenders to City Center that nearly pushed the $8.6 billion development into bankruptcy.
The agreed plan has the lenders fully financing the completion of City Center slated to open in Las Vegas by the end of 2009. Dubai World and MGM will fund their remaining equity commitment to City Center though letters of credit.
A $1.8 billion senior secured credit facility will be immediately funded under modified terms. The maturation date is 30 June 2012 with an interest rate increased by 2 percent although the amount is “pay in kind” through September 2010.
Dubai World, which has invested $4.3 billion to date in City Center, declined to make its half of a $200 million monthly payment in March needed to fund construction. It was funded instead by MGM. MGM covered Dubai’s World’s half of a $70 million payment again in April.
Under the agreement, Dubai World has agreed to fund its commitments and pay back the $135 million paid by MGM on its behalf.
Dubai World will also dismiss its lawsuit against MGM. The Dubai government-owned investment company sued MGM citing poor management and cost overruns as well as MGM Mirage struggling from its own $13.5 billion debt load.
Colony Capital was in “preliminary” talks with Dubai World and MGM about a possible investment in City Center last month, according to people familiar with the situation. However, discussions were short-lived.