The primary general contractor of MGM Mirage’s (MGM) $8.5 billion CityCenter project on the Las Vegas Strip is planning to take legal action against its owners. 

MGM Mirage, which owns CityCenter in a joint venture with Dubai World, has disclosed in a regulatory filing with the Securities and Exchange Commission last Friday that the primary general contractor for the CityCenter project has sent a notice of its intent to file mechanics’ liens on CityCenter for an alleged approximately $492 million claim against CityCenter. 

However, according to the filing by MGM, the actual obligation to the general contractor is significantly lower than the amount claimed. Additionally, the company in its turn believes that it has substantial claims against the contractor as well, as a result of the problems created with the CityCenter’s Harmon Hotel construction. 

Harmon Hotel was initially designed to be a 49-storey condominium hotel. However, the height was reduced to half after the local building inspectors found constructional fault in the building. An investigation regarding the general contractor’s potential liability in the Harmon Hotel case is also ongoing. 

MGM plans to pursue all of its rights and remedies against the general contractor, including arbitration. However, CityCenter has obtained a six-month amendment to the credit facility that would allow for additional construction liens. 

The credit facility was amended as the general contractor may be able to file liens for an amount in excess of that allowed by CityCenter’s fully drawn $1.8 billion senior secured credit facility.
Read the full analyst report on “MGM”
Zacks Investment Research