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Posted At : October 29, 2008 02:07 PM | Posted By : D McKee
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MGM Mirage
In the wake of MGM Mirage's announcement today that it was trimming $400 million from the cost of CityCenter and had secured an additional $500 million in loan commitments, I was left with two questions: A) How were the savings to be achieved (seeing as the project is so far advanced), and B) How much of a funding gap remains?
I just received a lengthy answer from MGM's Alan Feldman. Rather than attempt to summarize it -- and possibly misinterpret something -- I've chosen reprint it. What follows is Feldman's response exactly as received, save for a couple of corrected typos, and some bold-facing and italicization for clarity.
"Here are the basics in billions:
$9.1 Construction budget
$4.0 Monies already spent
$5.1 Remaining to be spent
Less:
$1.8 Amount of recently announced loan
$0.4 Amount of cost savings announced today
$2.9 Amount left to either finance or pay
"We announced today that we are prepared, as is our partner, to fund this amount in its entirelty if need be. We also announced today that we have $0.5 in commitments from banks, although the final documents have not been signed. We continue to talk with other banks about additional financing up to a total of $1.2bn.
"So, if we are able to get the total of $1.2bn that we were seeking, that would leave $1.7bn for the partners to fund ($0.85bn each).
"In any event, we are ready and able to finish the balance of CityCenter construction to completion with, or without, additional financing.
"The majority of the $0.4bn savings comes from new actual charges coming from sub-contractors on labor and material as a result of the down-turn in the construction market here in LV and elsewhere. Prices are falling. As a result, we are coming in under budget for work that has yet to be completed.
"Hope that helps."
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