Nugget No. 1 - Big day tomorrow in the CityCenter world. Both MGM MIRAGE and Dubai World must fund a payment and, sources say, so far Dubai World has not come through on its part of the transaction. If it does not do so, the project could be shut down Friday.
But MGM MIRAGE has other options, including funding Dubai's payment, too. And, the question looms, could the company find another partner at this point to infuse cash?
The reverberations if the project is padlocked will be felt all over the state, from the Strip to the Legislative Building.
Wowzer. The national economy is showing hopeful signs, but is tomorrow the day that Nevada actually falls off the cliff? I searched around to see if I'd missed any stories from either local newspaper on this and didn't find anything in today's R-J or Sun. But nope, nothing on either site nor on the blogs of the city's two key gaming reporters.
Am I missing something here? If Dubai refuses to pay, MGM may stop construction on CityCenter and the top headlines on local newspaper sites right now are about Legislature Democrats not having a budget plan ready by Monday and hearings on a lottery? I mean, those are worthy stories both, but does any of it matter if 10,000 construction workers lose their jobs tomorrow and 12,000 full-time jobs are thrown into jeopardy? Shouldn't both sites have countdown clocks or something?
Also strange, given this scenario, was the rather startling uptick in MGM Mirage stock right at the last few moments of trading today. See? (click on the image to make it clearer.)
Does someone know something? Or does someone think they know something and they're wrong? The stock, up 8 percent today, fell 9.4 percent in after hours trading.
I'd love to watch what happens at the opening bell tomorrow, but I'll be at a military parade for which I must leave my hotel room at 5:45 a.m. CT. "Eek!" in advance for all involved.
[UPDATE, 7:22 pm PT: At least someone besides Ralston notices this pivotal moment. The Wall Street Journal, of course.]
[UPDATE#2, 8:09 pm PT: The R-J just posted what appears to be Howard Stutz's piece for Friday's paper. No "breaking news" tag on it to denote its urgency, though. The Sun, despite having Ralston on staff and some of the reputed best minds in web journalism in their arsenal, still has nothing. Odd, that.]
15 comments:
Yeah, we were discussing on TWHT a little bit in the comments, linking into the WSJ story.
Bad news... but we're all used to that, right?
Hunter
maybe criss angel and lance burton can put their heads together and save their parent company!!! they need something supernatural!
Is there a way to look up who made the trades that spiked the MGM volume and price at the last moments of trading that Steve has pointed out? Could it have been Dubai folks who know they're going to give over the money tomorrow after all?
How about some more Lackland coverage? Your perspective on basic training sounds more entertaining than billion dollar posturing.
Jeff in OKC
If I understand it correctly. City Center would file bankruptcy, should it come to that, NOT MGM-Mirage. There is a difference for sure. This is very bad either way, but it would be much worse if MGM-Mirage filed, and I think that's not the case. I'm no expert, but City Center could go into chapter 11, and I assume the rest of MGM's portfolio, could operate, and be left untouched, and not be effected.
Yes, Brian - this would be CC only. One benefit of compartmentalizing all the operating companies.
- Hunter
One of my commenters linked to the Times on this as well:
http://www.nytimes.com/2009/03/27/business/27mgm.html?_r=2&partner=rss&emc=rss
- Hunter
i'm confused. then does that mean that the money MGM Mirage got from the TI does NOT go to help with CityCenter? Also, $220 million is close to the remaining amount Phil Ruffin owes. If he pays up in cash tomorrow, does that help?
As I understand it, the way the JV is constituted, *both* parties have to put in their share.
The WSJ makes it sound like MGM can't pay the DW portion, even if they wanted to - and they might not want to.
If they are jockeying for better position, they don't want to bail out DW who has a lot to lose given the $4+ billion they've put in already.
Viva!
- Hunter
Mmmm... also - Ruffin ownes $175 million on TI and he's gonna get a $20MM discount if he pays by by 4/30.
That will not help MGM Mirage for tomorrow's action.
LV SUN has it:
http://www.lasvegassun.com/news/2009/mar/26/reports-citycenter-hires-law-firm-preps-bankruptcy/
- Hunter
well, it's about time! and guess who's still not asleep because Jeff in OKC made me feel guilty about not posting about Lackland yet...
Keep in mind that Dubai, the country, is in financial trouble now. They have no oil and got their money from investors and being a financial center. Their economy went bust with the rest of the world. Their law suit to get out of the deal maybe just a cover for the fact that they no longer have the money to cover the CC debt.
MGM had $650MM on hand at the time of last week's conference call (i.e., before Phil Ruffin's $600MM check cleared) but money is coming and going out so fast the company can't give me a firm number. Also, any shortfall would have to be made up by taking money out of the MGM Mirage kitty and putting into the City Center LLC one, so there's a bit of robbing Peter to pay Paul involved. Whatever its motive, Dubai World is playing a potentially catastrophic game of "chicken."
Stock market fluctuations often appear totally counterintuitive. For instance, Brad Stone leaves LV Sands but the stock trades up because Sheldon Adelson is contemplating the possibility that he (Sheldon) might buy back a small fraction of the company's debt if he feels like it. Go figure.
David McKee
MGM made the 220 million payment per the WSJ. If that was the total payment, they now have a claim against DW for what DW was supposed to pay. Expect them to act on it.
SG
Post a Comment