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Gaming Guru

Howard Stutz

Dubai World arm closes stock placement

22 October 2007

DUBAI AND LAS VEGAS, Nevada -- The investment arm of the Persian Gulf state of Dubai now controls 4.8 percent of MGM Mirage.

A previously announced private placement of 14.2 million shares of MGM Mirage was completed Friday by a subsidiary of Dubai World. The total purchase price was $1.19 billion, or $84 a share.

The shares, traded on the New York Stock Exchange, were issued directly to the Dubai World subsidiary from treasury shares held by MGM Mirage.

Dubai World now owns 14,548,838 shares, which includes the 348,838 shares the entity purchased on the open market when its tender expired Oct. 5. The number of shares fell well short of the planned 14.2 million Dubai World had desired. Originally. Dubai World wanted to acquire 28.4 million shares, or just less than 10 percent of MGM Mirage.

In its filings with the Security and Exchange Commission, Dubai World said it hoped to acquire as much as 20 percent or MGM Mirage. Los Angeles billionaire Kirk Kerkorian continues to be MGM Mirage's majority shareholder with a 54 percent stake in the company.

Shares of MGM Mirage closed Friday at $91.95, $2.75 or 2.9 percent.

MGM Mirage shares have risen 31 percent in value since May when the 90-year-old Kerkorian dropped hints he wanted to buy the company's $7.4 billion CityCenter project and Bellagio.

Those plans were dropped in August when a joint venture was announced with Dubai World, which agreed to invest $2.7 billion in MGM Mirage to acquire half of CityCenter. The potential stock transactions were also announced.

In September, Dubai World entered a second joint venture with MGM Mirage, agreeing to partner with Kerzner International Holdings to develop 40 acres on the southwest corner of the Strip and Sahara Avenue.

Dubai World and Kerzner will contribute a combined $600 million cash for a 25 percent equity investment each. MGM Mirage will contribute 40 acres valued at $20 million per acre, for a 50 percent share of the project. The gaming company will also receive a $200 million cash distribution from the partnership.

The Bahamas-based Kerzner will lead the project's planning and design.

Dubai World, which was profiled a week ago on the CBS television show "60 Minutes," will face licensing from Nevada gaming regulators because of its 50 percent purchase of CityCenter, which will include a 4,000-room hotel-casino as the 76-acre project's centerpiece.

Dubai World made headlines last year when its subsidiary, Dubai Ports World, was forced to sell its U.S. port operations after an uproar in Congress over security concerns.

In August, Dubai World signed an agreement for control of the Barneys New York department store. A division of Dubai World spent $100 million this year to buy the QE2, the majestic ocean liner that has carried millions of people across the Atlantic during its 40-year history.

The company plans to turn the giant passenger ship into a floating first-class hotel, retail and entertainment destination, berthed off Dubai's man-made Palm Jumeirah island.

Dubai World arm closes stock placement is republished from