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Best of Howard Stutz

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Howard Stutz
 

Kerkorian investment arm moving headquarters to Las Vegas

21 December 2015

Tracinda Corp., the investment arm of late billionaire Kirk Kerkorian, is moving its corporate headquarters to Las Vegas from Los Angeles to be closer to the company's largest holdings, MGM Resorts International.

The company owns 16.19% of the Strip gaming giant. Kerkorian, who died June 16 at age 98, left instructions that Tracinda "execute an orderly disposition" of the company's MGM Resorts stock. No time frame was given.

Tracinda's top two executives, Tony Mandekic and Daniel Taylor, are both on MGM Resorts' board of directors. They said the company will have a four-person office south of McCarran International Airport, but they don't look at the move being a short stay.

In an interview, Mandekic and Taylor said the Tracinda investment in MGM is viewed as "long term" because of initiatives undertaken by the casino operator that they believe will be good for shareholders.

MGM Resorts has been renovating and expanding its holdings in Las Vegas, including the $100 million nongaming Park development and the $350 million Las Vegas Arena that opens in April. Last week, the company said it will spend $154 million to expand the Aria Resort & Casino convention center and this year opened an expansion of the Mandalay Bay Resort & Casino convention complex.

"We see a number of things the company is doing that will build long-term shareholder value," Mandekic said.

MGM Resorts also said it was completing a profit growth initiative to increase annual cash flow $300 million by 2017 and will place 10 of its properties — including seven on the Strip — into a real estate investment trust that will be 70% owned by the casino giant, but will also offer the company "strategic and financial benefits."

Mandekic said the company's resort developments in Maryland, Massachusetts and Macau will also add to the bottom line.

"Tracinda is supportive of the REIT and we could see beneficial results of the some of the initiatives in the next 12 months," Mandekic said. "We expect to see beneficial results in the next 12 months."

In a filing with the Securities and Exchange Commission on the day Kerkorian died, Tracinda stated "there is substantial value in the assets of MGM Resorts and that the company is a good long-term investment."

MGM Resorts Chairman and CEO Jim Murren said Tracinda's move to Las Vegas signifies the company's "support of MGM Resorts, and the management team, is a foundation for the company's growth and success."

Mandekic, 73, was Kerkorian's close friend and confidant. He was named executor of Kerkorian's estate and is awaiting court approval to handle the duties. Tracinda — named for Kerkorian's daughters Tracy and Linda — was formed in 1976 and is incorporated in Nevada.

"This is kind of a homecoming for us," Taylor said.

The executives said Tracinda would consider other business investments, but nothing that would match the scale and scope of MGM.

Tracinda served as the vehicle for Kerkorian's vast investments beyond MGM. He bought and sold automobile manufacturers, gas and oil development companies and Metro-Goldwyn-Mayer Inc. Taylor served as an executive of film studios from 1998 to 2005 including a year as president.

"Everything he did was through Tracinda," Mandekic said.

Kerkorian, a Los Angeles philanthropist, founded MGM Resorts in the 1990s. It was the second time he brought the name MGM to the Strip. Over the years, Kerkorian reduced his majority stake in the company. He retired from its board in 2011, becoming a senior adviser.

By 2009, his shares in the company had diminished from 54% to 37%. Still, Kerkorian was legendary for his maneuvers that often moved the needle on the value of MGM Resorts.

In 2007, as the recession began to weigh on MGM's under-construction CityCenter, Kerkorian — through Tracinda — offered to buy the development along with Bellagio. The deal went nowhere, but MGM Resorts' stock price jumped 16% the day the news broke.
Kerkorian investment arm moving headquarters to Las Vegas is republished from Online.CasinoCity.com.