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Collapse of talks: Colony Quits MGM Mirage Deal

By Amarendra Bhushan for CEOWORLD Magazine Updated:April 10, 2009

As the recession takes a toll on gambling getaways, Colony Capital LLC has ended its talks with MGM Mirage, which owns properties from Las Vegas to Detroit to Macau, over a potential investment. Recently, the WSJ reported that MGM Mirage is in talks with Colony Capital to secure a loan of about $750 million to help refinance its debt.

The collapse of talks with Colony, a Los Angeles-based investment firm, means that MGM must find other ways to fund its projects and repay debt. Las Vegas-based MGM Mirage, which is controlled by Kirk Kerkorian, is struggling to come up with a plan to fund its City Center project, and also to find ways to service its debt.

The company is currently in negotiations with its lenders about the terms of debt. MGM was recently granted a waiver by its lenders until May 15 to restructure at least $7 billion of the $13.5 billion in long-term debt.

MGM, the world’s No. 2 casino operator, and its joint venture partner Dubai World develop $8.6 billion City Center project, a residential, resort and retail complex on the Las Vegas Strip, which is scheduled to open in December and has been under construction since 2005.

Colony had been discussing a possible joint investment with Crown Ltd., the Australian gambling company controlled by James Packer.

Last year, Chief Executive Jim Murren said all options for the company were on the table as MGM manoeuvred to trim its debt while completing financing for its $8.7 billion (6 billion pounds) CityCenter joint venture on the Las Vegas Strip.

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