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Wed 17 Mar 2010 07:55 PM

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CityCenter contractor expects payment from MGM

Construction company gave notice last week that it may file a lien with City Center.

CityCenter contractor expects payment from MGM
PAYMENT EXPECTED: The general contractor for MGM Mirages CityCenter joint venture in Las Vegas said that it still expects payment of monies due for work on the $8.5bn project. (Getty Images)

The general contractor for MGM Mirage's CityCenter joint venture in Las Vegas said it still expects payment of monies due for work on the $8.5 billion project.

The statement from Tutor Perini Co, whose Perini Building unit is the primary CityCenter contractor, comes after the construction company gave notice last week that it may file a lien with CityCenter in the amount of $491.2 million.

Tutor Perini said in a regulatory filing Wednesday that it was required to file a 15 day notice of intent to lien under Nevada law to preserve its lien rights should CityCenter not pay amounts owed to it.

Tutor said the $491.2 million stated in its notice, filed March 11, includes primarily contract receivables and claims for additional work.

Casino operator MGM, which disclosed the possible lien in its own filing with the Securities and Exchange Commission last week, said at that time that CityCenter believes its actual obligation to Perini is "substantially less than the amount claimed" and added that the project was entitled to "significant offsets" against the claimed amount.

MGM's filing also stated a belief that it has claims against the general contractor tied to construction defects at CityCenter's Harmon Hotel tower.

A mechanics lien is a lien against buildings allowed by some states to contractors, laborers and suppliers of materials used in construction or repair.

In its filing on Wednesday, Tutor Perini said it has contractual indemnities from the responsible contractor as well as insurance coverage that it expects will be sufficient to cover any liability tied to the Harmon Hotel matter.

Tutor Perini added that it is not aware of a basis for other claims that would amount to material offsets against what CityCenter owes.

In its filing, Tutor Perini said: "The company intends to pursue collection of all amounts owed, to exercise all rights and remedies available to it, and to defend itself vigorously against any claims that MGM ultimately decides to pursue."

The CityCenter project on the Las Vegas Strip is owned by MGM Mirage in a 50-50 partnership with Dubai World. The complex opened in December.

Separately, MGM Mirage said on Wednesday that it closed a private offering of $845 million of 9 percent senior secured notes due March 2020.

It said net proceeds of about $826 million were applied to the prepayment of about $820 million of loans under its senior credit facility and related fees.

Shares of MGM Mirage were up 2.6 percent to $12.63 in morning New York Stock Exchange trading. Tutor Perini was up about 1 percent to $20.55. (Reuters)

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