CityCenter Partner Suing MGM Mirage Not a Surprise

(MoneyWatch)  As everyone else was reading about how MGM Mirage might declare bankruptcy or default on it loans, so was its CityCenter partner, Infinity World. And obviously it didn't want to be stuck holding the bag.

So, Infinity World, a division of Dubai World, decided to sue MGM Mirage for breaching their partnership agreement and salvage what little it could. The lawsuit was based on MGM Mirage's own annual report which said, "There is substantial doubt about our ability to continue as a growing concern," and told of its $13.5 billion debt and possibility of default. It also spoke of a waiver that would put off creditors for a few months, but there were no guarantees the company wouldn't plunge into default afterwards.

Infinity World said the extra time would be unlikely to help the beleaguered casino operator, and the CityCenter project would likely need more funds to keep going -- something Infinity World wasn't interested in providing.

MGM Mirage finally responded to the today suit by saying it was "completely without merit."
I'm actually surprised it took this long for Infinity to try to break their joint-venture agreement. Already it's in for $4.3 billion of the $8.8 billion Las Vegas strip project which has yet to open or make any money. And at this rate, it's becoming more doubtful that it will open with MGM Mirage involved. Not knowing all the details of the agreement, it's difficult to know if Infinity has a solid case, but I hardly blame them for trying.

In the case of bankruptcy or default, there's a chance Infinity may lose everything and still owe money. At least by severing the partnership now, the company can cut their losses and move on.