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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].
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].