Dubai World keeps investors wondering about future

Apr 15, 2008 7:00 PM

by Ray Poirier | No wonder investors are having trouble figuring out what is going on with MGM MIRAGE Inc. (MGM) and its CityCenter partner, Dubai World.

With the major investment Dubai World and its subsidiaries made in the country’s second largest gaming company, many on Wall Street thought that at some point the Arab investors would buy out the 89-year-old Kirk Kerkorian and his 52% MGM holdings.

At a meeting before Michigan gaming regulators, Dubai World asked for and was granted permission to increase its MGM ownership of shares from the current 9.5% to just under 15%.

And in Nevada, the investors have begun the necessary paper work to have both the Nevada Gaming Control Board and the Gaming Commission approve share ownership in MGM MIRAGE of up to 20%.

But, when the question was put to Sultan Ahmed bin Sulayem, chairman of Dubai World, he replied with the curt, "We have no plans on that front." He followed that by saying that Dubai World won’t "necessarily" increase its position in MGM shares immediately.

Not too long ago, Dubai World was snapping up MGM stock at prices in excess of $80 per share.

Last week, following downgrades by several Wall Street analysts, the price of MGM shares fell to the low $50 range.

Before Dubai World became involved, Kerkorian suggested publicly that he might make a bid to take CityCenter private, comments that preceded the recent declining stock market. However, there has been no word from any insider that efforts will be made to boost the current share price.

With some economists suggesting that the current U.S. slump could last as much as 18 months, investors have not found much encouragement to accumulate the gaming companies.