Dubai World paid US$84 a share for a 9.5% stake in MGM Mirage in 2007. The stock is just shy of 2 bucks today. FT’s Lex checks in with the gambling company:

This means MGM’s debt burden is rising – estimated at about $14.5bn against its lowly equity value of $550m – as earnings head in the other direction. It could this quarter breach a covenant on its maxed-out senior credit facility.

Dubai World simultaneously invested US$2.7 billion in CityCenter (a hotel, casino, residential project on the strip). Lex again:

Negotiations with Deutsche Bank to fund the remaining $1.2bn of its vast CityCenter project (a condominium-based scheme conceived at the property bubble’s apex) have reportedly collapsed. Meanwhile, the development consumes about $100m each month.

Dubai mistimed its MGM forays, piling in at the top of a cycle even as many commentators were describing the Vegas hotel and condo market as a bubble waiting to burst.
Lex ends on this note:

MGM’s plight is becoming familiar. Three of the city’s big four, which control the vast bulk of Strip revenues, are struggling with their debts. Leveraging up to gamble on ambitious developments left Sin City facing poor odds.

Not an outcome that would be helpful to Dubai World’s financing issues. At one point Dubai World had planned to increase its MGM stake to 20% but those plans seem unlikely in light of continuing financing problems for the company. How did Dubai World diversify away from an overly leveraged position in its red hot local property market? By diving into an equally over-leveraged company operating in an over heating property market in the Nevada desert.

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