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Lawsuit clouds future of CityCenter

LAS VEGAS, Nevada -- Uncertainties now are clouding the future of the $8.7 billion CityCenter project under construction on the Las Vegas Strip, with one of the partners suing the other, saying it cannot continue to fund the development in its current status.

Dubai World today announced that its subsidiary Infinity World, MGM Mirage's partner in CityCenter, has filed a lawsuit against MGM Mirage in Delaware Chancery Court claiming that because of MGM Mirage's financial troubles "the current path of the project is simply unsustainable.'

Infinity World said it sued to protect its rights and the best interests of the CityCenter project.

MGM Mirage had no immediate response to the lawsuit.

The lawsuit alleges that MGM's annual report March 17 contains disclosures that constitute a breach of the CityCenter joint venture agreement and puts the CityCenter development project at risk. Specifically, Dubai World cited MGM Mirage's declaration that "There is substantial doubt about our ability to continue as a going concern" -- accounting jargon meaning MGM Mirage may be headed toward bankruptcy.

In its court filing today, Infinity World asked for a declaratory judgment and other measures that would relieve Infinity World of its obligations under the joint venture agreement resulting from MGM's alleged breach of contract

"Dubai World said MGM's disclosure that it cannot provide assurance that it will be able to meet its future payment obligations to CityCenter has left it no other option but to act to protect its investment and the future of CityCenter. The current path of the project is simply unsustainable given our partner's financial troubles,' the company said in a press release.

"Furthermore, the company said, MGM has mismanaged the CityCenter project, resulting in costs significantly over budget despite downsizing certain of the facilities. This has caused Infinity World to make capital contributions far in excess of the levels originally estimated by MGM,' the press release says.

MGM Mirage said on March 17 it lost $1.1 billion, or $4.15 a share, for the fourth quarter of 2008, compared to a profit of $872.2 million, or $2.85 a share, during the same period a year earlier. Revenue fell 15 percent to $1.8 billion over that period.

Copyright © Las Vegas Sun. Inc. Republished with permission.

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