MGM, Dubai World late in raising $3.5b loan for CityCentre project

DUBAI — MGM Mirage and Dubai World are late in raising as much as $3.5 billion for their $11.2 billion CityCentre project in Las Vegas because banks are wary of making new loans.

By (Bloomberg)

Published: Thu 31 Jul 2008, 12:59 AM

Last updated: Sun 5 Apr 2015, 1:00 PM

Deutsche Bank AG and Credit Suisse Group, the Zurich-based bank that advised Dubai World last year when it invested $5.1 billion 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 CFO 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 CityCentre, 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," 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 per cent during the past year to $3.27 trillion, 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 $100 million each per month, D'Arrigo said in May. MGM and Dubai World will raise at least $3 billion and may increase that to $3.5 billion 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 $2 billion from banks including UBS AG and Royal Bank of Scotland Plc, 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 Charlotte-based Bank of America, and UBS spokeswoman Rohini Pragasam declined to comment. Peter Ward, a spokesman for Edinburgh-based Royal Bank of Scotland, didn't return calls for comment.

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