DUBAI // MGM Mirage, the casino and resort developer partly owned by Dubai World, has drawn down the last US$843 million (Dh3.09 billion) of a $4.5bn standing loan, raising questions among analysts about its ability to complete existing projects and service its debts. MGM's shares lost more than 20 per cent of their value on Friday after the ratings agency Standard & Poor's cut its assessment of the company's creditworthiness. MGM Mirage last month said it was scaling back its $9.2bn CityCenter project on the Las Vegas strip to cut costs, raise cash and sharpen its focus. That announcement came on the heels of news that James Murren, the chief executive, had agreed to sell the Las Vegas casino, Treasure Island, for $775m. S&P cuts its rating on MGM by two notches, to "B minus" from "B plus", saying the company faced liquidity concerns on the back of falling earnings, according to Bloomberg. S&P said MGM may face difficulties completing CityCenter and in meeting bond payments due in 2010 without selling more assets, or luring additional investment. Dubai World owns 9.4 per cent of the Las Vegas-based company through its subsidiary, Infinity World Development, and analysts had expected it to help out the firm by raising its stake. Regulators reportedly gave permission in August last year for Dubai World to raise its stake in MGM to as much as 20 per cent. But analysts said that appeared less likely now, as global credit receded and as Dubai World and other state-controlled companies addressed their own funding challenges. "It is one of the options, but I don't see the likelihood of this option being exercised, given the current financial turmoil," said Ahmad Atwan, the chief operating officer of the Sharia-compliant investment bank Millennium Finance. Dubai World officials did not return calls seeking comment. With global property markets turning downwards, aggressive investments by Dubai entities were coming back to haunt them as the economic downturn strengthened, said Ali Khan, a director at Arqaam Capital. Emaar's US subsidiary, John Laing homes, had filed for bankruptcy protection, an event that was likely to diminish Dubai World's appetite for any additional exposure, he said. "They have had larger deals when the liquidity was abundant in the market, but one would expect them now to proceed with caution." Dubai World in December repaid the outstanding balance of $890m on a $1.2bn loan facility arranged and underwritten jointly by RBS, Credit Suisse and Deutsche Bank. The loan facility was established a year earlier to help finance the purchase of its stake in the gaming and hospitality giant. MGM Mirage and Dubai World could also be in discussion with Deutsche Bank about terms under which the partners could secure the final $1.2bn in financing for the CityCenter project, Reuters said last week, quoting industry sources. "It is our expectation that management is taking steps to attempt to resolve these issues," S&P said, adding that it could lower its rating on MGM further in the near term if a plan that addressed these issues was not put in place. MGM Mirage is also working with the Abu Dhabi Government on a hotel project in the capital. "The project, which is an iconic hotel designed by Rafael Vignoly, is still going forward as planned. It's now entering the detailed design phase," said a spokeswoman for Mubadala Development, declining to give further details. skhan@thenational.ae
