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Colony and Crown Casino Plans to Invest at City Center Project

On April 4th, 2009, Australian billion and gaming magnate James Packer is weighing a stake option in the City Center, the troubled $8.6 billion Las Vegas development owned and developed by MGM Mirage and Dubai World, according to gaming industry resources. Mr. Packer, whose Melbourne-based gaming organization, Crown Limited, has casino facilities in Australia and China, is currently discussing the possibility of investing in the project with Colony Capital LLC, an investment firm from Los Angeles, California.

Colony and Crown plans to take over the financial requirement of the project. A spokesperson for Crown Limited declined to comment on the issue but said that Crown is always prepared to evaluate gaming proposal and investment opportunities which will benefit their shareholders. There a lot of problems need to be solve and negotiations could fall apart but according to gaming industry resources, MGM Mirage's creditors, who must approve the gaming organization's payments to City Center have got to settle on a solution to save the project.

City Center needs a total of $800 million from both casino partner before it can use a $1.8 billion credit assistance from lender need to finish the construction of the facility. A financial investment from Colony and Crown could infuse enough money into the City Center project to save it from ruin and keep it from closing down. The project employs around 8,500 constructio0n workers and is expexted to employ a total of 12,000 casino employees when it opens later this year.

Dubai World, the investment division of the Persian Gulf State, is currently pursuing a case against MGM Mirage over the City Center, citing cost overrungs and mismanagement of the project. Dubai World has invested $4.3 billion in the project but skipped its month payment in March. MGM Mirage invested a total of $200 million in project including the share of Dubai World to keep the construction going. But that put MGM Mirage, which is at the verge of bankruptcy, under even bigger financial problem.

In its case, Dubai World questioned MGM's drive to complete the project. Among the solutions being considered is that MGM Mirage and Dubai World could acquire a smaller stake in the project in return for financial assistance from other parties.

Another option is restructuring the project in a bankruptcy court. Colony owns a seventy-five percent share in Station Casinos Incorporated while Crown Casino owns a 19.6 percent interest in Fontainebleau Equity Holdings LLC. Both organizations have Las Vegas gaming properties.

 

Sunday, April 19 , 2009
Brian Letendre