UPDATE: MGM Plans Stock Sale, Gets Offer For Borgata Stake
12 Outubro 2010 - 8:38PM
Dow Jones News
MGM Resorts International (MGM) said Tuesday the Las Vegas-based
company and its largest shareholder Tracinda Corp. will sell at
least 68.7 million shares and that a bidder has emerged to buy its
stake in an Atlantic City, N.J., casino.
The equity sale comes as MGM Resorts predicts a smaller
third-quarter core loss than Wall Street expects, even as the
market in Sin City, brutalized by the recent recession, continues
to be dicey.
MGM said it will sell at least 40.9 million shares, while
Tracinda, owned by billionaire investor Kirk Kerkorian, offered a
minimum of 27.8 million with Barclays Capital Inc. acting as the
sole underwriter on the deal.
There are some 441 million shares outstanding. The potentially
dilutive planned equity sale pushed the company's shares down 5.4%
to $12.87 in after-hours trading.
A spokesman for MGM Resorts declined further comment. Tracinda
said in a statement that it viewed the company as a good long term
investment and believed there is "substantial value in the assets."
After the sale, Tracinda will have a roughly 30% stake in MGM
Resorts, down from its current 37%.
Proceeds from MGM's sale will go toward debt repayment, a prime
source of fresh capital that corporations have been raising over
the past year from stock sales. MGM has been saddled for some time
by a heavy debt load, in part from borrowing heavily to finance its
Asia expansion and to upgrade its Las Vegas casinos.
Meanwhile, the company projected a third-quarter loss of 72
cents a share, including a $347 million write-down on its $8.5
billion City Center development. Analysts on average were looking
for a loss of 24 cents per share, according to a poll by Thomson
Reuters. Analyst estimates typically exclude items such as
write-downs.
MGM Resorts added that revenue per available room from its Las
Vegas Strip properties fell 2% as companywide casino revenue
dropped 9%.
The company also said Tuesday it received an offer of slightly
less than $250 million for its 50% stake in the Borgata Hotel
Casino & Spa in Atlantic City, and has submitted the offer to
its partner, Boyd Gaming Corp. (BYD).
MGM didn't disclose the bidder. A representative from Boyd
Gaming wasn't immediately available to comment.
Because the offer is less than the carrying value of MGM's
Borgata investment, MGM would post a $129 million third-quarter
write-down.
MGM struck a deal with New Jersey regulators in March to sell
most of its Atlantic City assets in 18 months. The regulators
required this because it believes MGM has a business partner in
Macau with ties to organized crime. MGM has denied this.
Following the opening of the company's $8.5 billion City Center
resort on the Las Vegas Strip, which includes a casino, several
hotels, condos and a shopping mall, Las Vegas has suffered an over
abundance of rooms, which has hurt other properties there due to
the weak economy. The company in August reported that overall
company revenues had increased just 3% to $1.54 billion in the
second quarter of the year, despite the addition of City
Center.
-By A.D. Pruitt, Dow Jones Newswires; 212-416-2197;
angela.pruitt@dowjones.com
(Kathy Shwiff contributed to this article.)
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