The Work

March 27, 2009 4:33 PM

Firms Line Up For Dubai World-MGM Mirage Vegas-Style Showdown

Posted by Brian Baxter


Once thought to be the latest jewel to join the Las Vegas Strip, the $8.6 billion CityCenter project by Dubai World and MGM Mirage began losing its luster after the onset of the global economic crisis.

The Am Law Daily has learned that four Am Law 100 firms--Quinn Emanuel Urquhart Oliver & Hedges, Morrison & Foerster, Dewey & LeBoeuf, and Weil, Gotshal & Manges--have secured roles advising both Dubai World and MGM Mirage as the gap between the two grows over differences on the CityCenter development.

With tourism to the Sin City down double digits, once-profitable casinos have seen their profits take a comparable dip, putting them at risk of defaulting on loans they used to fund expansion plans.

That's the situation faced by MGM Mirage, the owner of such sparkling Las Vegas casinos as the Bellagio, LuxorMonte Carlo, and Mandalay Resort Group, a rival it acquired for $7.9 billion in 2005. Operating under a heavy debt load, the Las Vegas-based gaming company agreed to sell half of its interest in CityCenter to Dubai World in August 2007 for nearly $5 billion.

But Dubai World, the holding company that manages the myriad business interests of the Dubai government, now seems to be getting queasy about its partnership with MGM Mirage and the future financial viability of CityCenter.

On Monday the government-owned company filed a 13-page breach of contract complaint against MGM Mirage in Delaware's Chancery Court, claiming that cost overruns were jeopardizing the project. The complaint also indicates that Dubai World is unlikely to make a $100 million CityCenter payment on Friday.

Represented by Quinn Emanuel partners A. William Urquhart and Harry Olivar, Jr., in Los Angeles and Marc Becker in London--it helps to have a London-based lawyer given the 11-hour time difference between Dubai and Las Vegas--Dubai World is asking the court to free it from its obligation to make further payments on the joint venture.

Donald Wolfe, Jr., chairman of Delaware's Potter Anderson & Corroon, is serving as local litigation counsel to Dubai World along with partner Arthur Dent.

At the time of this post it was still unclear who was representing MGM Mirage in the Delaware litigation. The long-time outside lawyer for MGM Mirage founder Kirk Kerkorian--the former owner of the Metro-Goldwyn-Mayer movie studio controls 50 percent of the company--used to be Los Angeles litigator Terry Christensen.

But Christensen was sentenced to three years in prison in November on charges that he hired a private investigator to wiretap Kerkorian's ex-wife. Patricia Glaser, a name partner at Christensen's former firm, now called Glaser, Weil, Fink, Jacobs & Shapiro, has also handled litigation for MGM Mirage.

While Glaser did not immediately return a request for comment, Morrison & Foerster litigation partner Dan Marmalefsky, Kerkorian's counsel in civil litigation related to the wiretapping case, confirmed that the firm was also representing their billionaire client in the Dubai World dispute.

Marmalefsky says that MoFo senior of counsel Seth Hufstedler is representing Kerkorian in the growing desert dustup between MGM Mirage and Dubai World. Hufstedler did not immediately return a request for comment, which shouldn't be surprising considering the latest news regarding MGM Mirage.

Several news agencies reported on Friday that MGM Mirage and the CityCenter project itself were in the processing of preparing for a bankruptcy filing. Without a matching contribution from Dubai World, Bloomberg reports that MGM Mirage must make a combined $200 million payment to lenders on Friday. (MGM Mirage later made that payment, allowing CityCenter's construction to continue while it seeks additional financing.)

Sources to The Am Law Daily knowledgeable of the ongoing negotiations say that the situation between MGM Mirage, Dubai World, and CityCenter lenders remains extremely fluid.

MGM Mirage is being advised by Weil bankruptcy and restructuring partner Brian Rosen, corporate department cochair Thomas Roberts, and M&A partner Michael Aiello.

The CityCenter joint venture is receiving restructuring advice from former Weil bankruptcy bigwig Martin Bienenstock, now head of the business solutions and governance practice at Dewey & LeBoeuf. Partner Michael Kessler, who defected from Weil in January, is also advising CityCenter.

The 76-acre mixed-use complex is being built on the site of the old Boardwalk Hotel and Casino, which was demolished in May 2006.

Investors can only hope that CityCenter isn't ready to implode like its predecessor.

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