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Kerkorian may increase ownership stake in MGM Resorts15 March 2013
By Howard Stutz
Less than two years after saying it was exploring the sale of its stake in MGM Resorts International, the private investment arm of billionaire Kirk Kerkorian said in a regulatory filing Thursday it might reverse course.
Los Angeles-based Tracinda Corp., which is the largest shareholder of the Strip casino giant with an 18.6 percent ownership stake, said in a 13-D filing with the Securities and Exchange Commission that it might increase its ownership to 25 percent.
The announcement comes a little more than a year after Tracinda sold 20 million shares of MGM Resorts for $268 million.
A year earlier, Kerkorian said Tracinda might divest itself of its entire MGM Resorts stake.
Tracinda owns almost 91.2 million shares in the company that operates 10 Strip resorts — including the MGM Grand, Bellagio and The Mirage — and has a half-interest ownership in the CityCenter development.
The company also is the majority owner of the MGM Grand Macau and is building a second hotel-casino in the Cotai Strip region.
On Thursday, Tracinda said in the filing it might explore purchases of MGM Resorts shares either on the open market or directly from third parties.
Tracinda said it would purchase the stock during “trading windows” established by MGM Resorts.
The next such window is expected to open on the third day after the issuance of the company’s first quarter earnings, which wouldn’t take place until sometime in April at the earliest.
“No decision has been made as to the number of shares which may be acquired,” Tracinda said in the filing.
Kerkorian, 95, is the founder of MGM Grand Corp., the company that preceded MGM Resorts. Kerkorian left the company’s board of directors in 2011.
RBC Capital Markets gaming analyst John Kempf told investors the announcement could give a boost to MGM Resorts shares. The company’s stock price closed at $13.25 on the New York Stock Exchange, up 84 cents or 6.77 percent on nearly five times normal volume.
“It is not definite that additional shares would be purchased,” Kempf said. “However, in our view, there would be no need to make this filing unless there was interest in (Tracinda) increasing its position.”
MGM Resorts declined comment on the Kerkorian announcement.
The company is pursuing gaming expansion opportunities in Toronto, Massachusetts and Maryland.
After the company’s fourth quarter earnings announcement last month, MGM Resorts Chairman Jim Murren said the company wouldn’t be opposed to selling one or more of its properties in Las Vegas or elsewhere, if the numbers were to pencil out.
MGM Resorts is also expected to collect a dividend payment of $255 million from its 51 percent stake in MGM China, which is publicly traded on the Hong Kong Stock Exchange.
“We remain positive on MGM, as we continue to believe the company has several levers, particularly through its capital structure, to drive further increases in its stock price,” Kempf said.
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