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MGM Mirage's Sale of 143 Million Shares of Stock Provides
Time to Address Leverage and Liquidity Issues

By Howard Stutz, Las Vegas Review-JournalMcClatchy-Tribune Regional News

May 15, 2009--MGM Mirage placed 143 million shares of common stock on the market Thursday, almost double what the company had previously announced it was selling as part of an effort to raise $2.5 billion to resolve its debt and leveraging issues.

The financially struggling casino operator committed to its lenders that it would raise $1 billion from the stock sale and $1.5 billion from the private offering of senior notes secured by Bellagio and The Mirage.

MGM Mirage said it will use part of the offering's proceeds to repay at least $750 million under its senior credit facility and buy back some of its $14.4 billion in debt.

Deutsche Bank gaming analyst Andrew Zarnett said Thursday the company was taking the proper steps to address its leverage and liquidity issues.

"MGM Mirage now has ample financial flexibility, and more importantly, time to tackle its high leverage even though it is caught in the midst of a challenging fundamental environment," Zarnett told investors.

Shares of MGM Mirage fell almost 30 percent in value on Wednesday after the company announced its restructuring plan. That forced the company to increase the number of shares it was placing into the open market.

The shares went out on the New York Stock Exchange at $6.99 per share. The price of MGM Mirage's stock closed Thursday at $7.76, down 94 cents, or 10.8 percent.

MGM Mirage had approximately 276.6 million shares outstanding as of May 5, according to a filing with the Securities and Exchange Commission.

One unanswered question was what the additional stock would mean to the majority ownership stake of company founder Kirk Kerkorian. On Wednesday, the company said Kerkorian's privately held investment arm, Tracinda Corp., would purchase 8.1 million shares, or 10 percent, of the originally announced offering.

Several sources said Tracinda was committed to purchasing 10 percent of the stock, regardless of the additional shares offered.

Before the offering, Kerkorian, a 91-year-old Los Angeles-based billionaire, controlled through Tracinda 53.8 percent of MGM Mirage's outstanding shares. His ownership stake in the company was expected to drop to 43 percent based on Wednesday's figures. It could drop to 38 percent because of the additional stock being offered.

The underwriters of the 143 million-share stock offering will have a 30-day option to buy up to about 21.5 million additional shares to cover any overallotments.

Contact reporter Howard Stutz at or 702-477-3871.


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