The owners of the CityCenter project in Las Vegas, in which Dubai World has a 50 per cent stake, plan to raise more than US$1 billion (Dh3.67bn) from the sale of bonds.
Dubai World's Las Vegas project aims to raise $1bn
The owners of the CityCenter project in Las Vegas, in which Dubai World has a 50 per cent stake, plan to raise more than US$1 billion (Dh3.67bn) from the sale of bonds in an effort to restructure its extensive debt pile.
CityCenter Holdings, the owner of the giant hotel and entertainment complex, wants to sell $1.1bn of debt in a private placement.
Half of CityCenter Holdings is owned by a subsidiary of MGM Resorts, with the remainder owned by Infinity World, a wholly-owned subsidiary of Dubai World.
"CityCenter plans to use the net proceeds from the offering to reduce its obligations under its existing credit facility … to, among other things, extend the maturity of the remaining loans for four years," MGM said.
Since its opening more than a year ago, the casino and hotel development has been operating in a challenging environment.
In November, MGM Resorts posted pre-tax impairment charges of $182 million related to its investment in CityCenter and $46m related to its residential property.
The resort, which cost $8.5bn to build, has an equity value of $2.6bn. In the nine months to September, CityCenter made a loss of $963.1m, including $600m in writedowns.
"They're probably looking to raise debt to retire old debt and roll it over for a longer term," said Haissam Arabi, the chief executive of Gulfmena Alternative Investments. "This is good news. It gives them a chance to raise cash flow."
The project was planned during a period of economic growth. But the development opened after Las Vegas' hospitality and property sector had been battered by the global economic downturn.
CityCenter's main attraction is its 4,004-room Aria gaming resort, which opened in December 2009.
The 27-hectare Las Vegas Strip complex also includes the Cirque du Soleil show Viva Elvis, 2,400 condominiums and luxury non-gaming hotels including Las Vegas' first Mandarin Oriental. There is also a 46,450 square metre retail and entertainment district and a $40m fine art collection.
MGM Resorts has signed agreements to open properties across the world, including in China and Egypt, as well as in Dubai.
The company plans to open hotels under its Bellagio, MGM Grand and Skylofts brands as part of the Dubai Pearl development.