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  • MGM: 95-Year-Old Billionaire Casino Magnate Kerkorian May Increase S

    MGM: 95-Year-Old Billionaire Casino Magnate Kerkorian May Increase Stake

    Forbes
    3/14/2013

    By Abram Brown, Forbes Staff

    Billionaire Kirk Kerkorian says he may add to his stake in MGM
    Resorts, the company which he founded more than four decades ago.

    Kerkorian, 95, could boost his position to 25% from 18.6% through his
    investment company Tracinda, a new SEC filing shows. Kerkorian would
    be able to make the purchase during the next trading window set by
    MGM, which starts three days after its next quarterly report. His
    stake is currently 91.2 million shares, worth roughly $1.2 billion at
    today's price of $13.48 a share.

    Kerkorian stepped down as a director in June 2011, leaving it fully in
    the hands of CEO Jim Murren. Since then, the stock has lost 13%, and
    MGM swung to a $1.8 billion loss in 2012 from a $3.1 billion profit a
    year earlier. MGM's iconic properties on the Las Vegas Strip=80`the
    Bellagio, the Mirage and the MGM Grand-have lost their luster, and
    growth plans in China stalled.

    MGM in January finally won approval from Macau to build a second, $2.5
    billion casino in the Cotai Strip, the new center of Macau
    gaming. Next, MGM needs the Chinese government's permission to
    proceed. Obtaining immediate access to the gambling enclave is
    crucial. Growth is slowing, and access to labor and gaming tables is
    limited. Las Vegas Sands built its Venetian Macao casino-resort in
    Cotai and Wynn Resorts has received approval to break ground there,
    too.

    The Macau project will be MGM's first since 2009, when it put $9.2
    billion into the City Center development in Las Vegas. (Dubai World,
    an investment arm of the Dubai government, partnered with MGM.)
    Problems immediately besieged City Center. It added 2,400 luxury
    condos to a badly struggling city, and its 5,900 new hotel rooms came
    when millions fewer of Americas are visiting. MGM has subsequently
    slashed prices at several hotel-resorts within City Center.

    This is why an increased investment by Kerkorian sent shares up 8%
    today. Kerkorian's interest in MGM is a signal that he sees promise in
    the company's future.

    Kerkorian, a soft-spoken, slight man, built his $3.3 billion fortune
    through a whirl of deals. He's held and dealt major stakes in casinos,
    airlines, automobile companies and film studios. Kerkorian, a World
    War II pilot, a boxer and an eighth grade dropout, hung out his
    shingle in Las Vegas in 1962 with a small land stake. He late opened
    the MGM Grand after he bought the studio.

    Kerkorian recently broke off an engagement to Rodney Dangerfield's
    widow, then broke off another engagement with Lu Beard, a longtime
    friend and widow of an Oklahoma oil baron. Clearly age has dulled
    little about Kerkorian.


    Reach Abram Brown at [email protected].

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