MGM, Deutsche Bank Loan Talks Fail: Report

MGM Mirage ( MGM) and Dubai World failed to reach agreement with Deutsche Bank ( DB) and talks on a $1.2 billion loan to complete the Las Vegas CityCenter project collapsed, Bloomberg reports, citing people with knowledge of the matter.

Deutsche Bank was seeking equity and debt stakes in the $11.2 billion development on the Las Vegas Strip in return for the loan, according to the report. MGM Mirage and Dubai World, which would have merged CityCenter with a neighboring property owned by the bank, are now holding talks with other parties, one of the people said

Shares of MGM Mirage closed Wednesday at $2.21, its lowest in at least 19 years according to Bloomberg, after saying it may default on its debt amid development of its biggest casino project ever, the $8.6 billion CityCenter.

Reaching a deal with Deutsche Bank would have helped MGM Mirage, the gambling company owned by billionaire investor Kirk Kerkorian, and its Dubai partner finish the project without spending more of their own cash.

Deutsche Bank had considered combining its Cosmopolitan Resort & Casino tower, also under construction on the Las Vegas Strip, with the 67-acre CityCenter development between the Bellagio and Monte Carlo casinos. The project is scheduled to open late this year.

"We are having ongoing talks with our financial partners about our several options," Bloomberg quoted MGM Mirage spokesman Alan Feldman as saying. A Deutsche Bank spokesman declined to comment.

Unless the economy turns around and more people start gambling again, MGM Mirage believes it will break its loan agreements this year, according to a filing with the Securities and Exchange Commission. That would mean a default on its senior credit facility, which MGM has asked to modify.

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