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LAS VEGAS, Nevada -- MGM Mirage announced Thursday it was investing in the proposed $700 million M Resort that is being developed on the far southern end of Las Vegas Boulevard by Anthony Marnell III, the son of casino building pioneer Tony Marnell.
The casino giant, which operates 10 Strip resorts and is building the $7.4 billion Project CityCenter, will finance $160 million of the M Resort through a subordinated convertible note. The company said it will have the right to convert the note into a 50 percent equity interest in the resort 18 months after the note is issued if it has not been repaid.
Anthony Marnell III, who operates the Saddle West Casino in Pahrump in partnership with Sher Gaming, is buying MGM Mirage's two Laughlin casinos for $200 million. Nevada gaming regulators are expected to review the deal next month, and Marnell said he expects the transaction to close June 1.
Marnell said the deals are not related.
"A conversation kind of struck up during the Laughlin negotiations," Marnell said. "MGM Mirage is deploying a lot of capital around the globe with various joint venture partners. They saw what we were looking to do and we talked about them getting involved."
MGM Mirage President and Chief Financial Officer Jim Murren described the investment as similar to the company's partnership with Boyd Gaming Corp. in the Borgata in Atlantic City. Boyd is the developer and operator of the New Jersey resort that is considered the market leader. MGM Mirage is a partner in the joint venture that owns the land on which the Borgata sits.
"This was an opportunity to get involved with a person we respect and care about and with a very exciting project," Murren said. "When I started learning more about the concept, that started the ball rolling. It didn't take a rocket scientist to realize the M Resort is in a great position to capitalize on the tremendous growth in that end of the valley."
MGM Mirage has struck several joint venture deals recently. Last year, the company entered into deals to explore nongaming business opportunities with a company from the People's Republic of China and the Mubadala Development Co. of Abu Dhabi, United Arab Emirates.
Also, MGM Mirage has a joint-venture casino-and-hotel-development deal with the Mashantucket Pequot Tribal Nation, which operates the Foxwoods hotel-casino in southeastern Connecticut.
"In today's environment, you have to be selective," Murren said. "We thought this was the right opportunity."
Although MGM Mirage is a full partner in the project, Marnell said his company would handle development, construction and operation of the hotel-casino.
"I wouldn't say we were actively seeking a partner, but if we were going to take one on, it had to be the absolutely perfect partner," Marnell said. "From our perspective, MGM Mirage is the premier gaming company in the world."
Marnell said the initial development of the M Resort would include 400 hotel rooms and suites, a 100,000 square-foot casino, an events center and a spa. Construction is expected to begin by mid-May with an opening set for mid-2009. About 40 acres of the 80-acre site will be used initially.
Marnell's father's construction firm, Marnell Corrao Associates, built Wynn Las Vegas and Bellagio. Tony Marnell also built and operated the Rio before selling it to Harrah's in 1999.
Anthony Marnell III said M Resort would be operated similarly to Station Casinos' Green Valley Ranch Resort and Red Rock Resort, which caters to both locals and a mid-to-upper market destination traveler.
"M will be developed much in the same vein as my father did with the Rio," Marnell said. "It will have a primarily local audience, but over time, we hope to evolve it into a true destination resort."
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