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MGM, Dubai fall behind on loan for Las Vegas project |
NEW YORK: MGM Mirage and Dubai World are late in raising as much as $3.5bn for their $11.2bn CityCenter project in Las Vegas because banks saddled with debt to casinos and hotels are wary of making new loans.
Deutsche Bank and Credit Suisse Group, the Zurich-based bank that advised Dubai World last year when it invested $5.1bn in MGM, are among the holdouts, bankers with knowledge of the matter said.
Funding was supposed to be completed by the end of June, MGM chief financial officer Daniel D’Arrigo told analysts in May. President James Murren said Frankfurt-based Deutsche Bank has been part of every MGM loan since 1998.
“No company in America is having an easy time doing bank deals right now,” Murren said in an interview. “There will be some banks that can’t commit because they have a lot of exposure in the area or don’t like the pricing.”
Deutsche Bank, the biggest German bank, hasn’t yet made a decision on financing CityCenter, said spokesman John Gallagher in New York. “We continue to evaluate the opportunity,” he said. Duncan King, a New York-based spokesman for Credit Suisse, the second-largest Swiss bank, declined to comment. “Wall Street firms are scrutinising their extension of credit, particularly to the gaming industry, where the sentiment is pretty weak,” said Michael Paladino, an analyst at Fitch Ratings in New York.
The amount of commercial and industrial loans from banks, plus short-term commercial paper, fell almost 3% during the past year to $3.27tn, according to data compiled by the Federal Reserve.
Building the 76-acre “city-within-a-city,” designed by architects, including Norman Foster and Daniel Liebeskind, is costing Las Vegas-based MGM and Dubai about $100mn each per month, D’Arrigo said in May.
MGM and Dubai World will raise at least $3bn and may increase that to $3.5bn to fund construction, MGM’s Murren said on July 14. Murren, 46, declined to comment on which banks have signed on for the deal or on its terms.
Bank of America Corp is leading the fundraising and has commitments of as much as $2bn from banks including UBS AG and Royal Bank of Scotland, a banker involved in the deal said. Bank of America also is seeking financing from Middle Eastern and Asian banks.
Louise Hennessy, a spokeswoman for Bank of America, and UBS spokeswoman Rohini Pragasam declined to comment. – Bloomberg |
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