Dubai's Dubious Bet
The good folks at Dubai World are desperately seeking an oasis in the Las Vegas desert. Sadly, all they have stumbled upon is a Mirage
Dubai World, a developer, is suing MGM Mirage (Stock Quote: MGM) because it's worried about the viability of the CityCenter complex, an $8.6 billion joint project between the two companies.
Specifically, Dubai World's general counsel, George Dalton, cited concerns about a statement in MGM Mirage's annual report, warning it could default on its loans for CityCenter, widely touted by MGM Mirage as the most expensive private commercial development in U.S. history. The bill for this behemoth could push MGM Mirage, which lost $855 million last year, to seek bankruptcy court protection.
On Monday, Fitch Ratings downgraded MGM Mirage's Issuer Default Rating to the lowest possible junk rating. Shares of the company's stock have plummeted 95% over the past year to less than $3.
Just last week, MGM CEO Jim Murren told investors that the relationship between the two companies was "outstanding" when it obviously had imploded. Meanwhile, Dubai World's point man Dalton told reporters that, despite slamming its partner with a very public lawsuit, the company still wants to work with MGM and had "no choice" but to take legal action.
Dumb-o-meter score: 95 -- Dubai World and MGM in Las Vegas? Truly a losing pair.