MGM Grand, Inc. (NYSE: MGG) announced
today that its Board of Directors has authorized the Company to purchase up to
6,000,000 shares of MGM Grand common stock at $50 per share, representing
approximately 10% of the outstanding shares, exclusive of treasury shares.
The tender offer will complete the 12,000,000 share repurchase program which
was previously announced in June, 1998. The offer is expected to commence on
June 17, 1999 and to expire at 5:00 p.m., New York City time, July 23, 1999,
unless extended by the Company. As of June 9, 1999, MGM Grand had 62,217,548
shares outstanding, exclusive of treasury shares. The New York Stock Exchange
closing price for MGM Grand stock on June 10, 1999 was $43.125 per share.
The tender offer will only be made pursuant to the offering materials to
be distributed to MGM Grand`s stockholders. Under the terms of the tender
offer, MGM Grand`s stockholders will be given the opportunity to sell up to
6,000,000 shares of MGM Grand, Inc. common stock at $50 per share.
If more than 6,000,000 shares are tendered, and MGM Grand does not elect
to acquire such additional shares, there will be a proration. The tender
offer will not be contingent upon any minimum number of shares being tendered.
The Board of Directors of MGM Grand is not making any recommendation to
stockholders as to whether or not they should tender any shares pursuant to
MGM Grand has been informed that its principal stockholders, Tracinda
Corporation and Kirk Kerkorian do not intend to participate in the tender
offer. However, Mr. Kerkorian has requested MGM Grand to register for sale by
him up to 3,894,406 shares of MGM Grand stock, which he owns directly and
which is approximately the number of shares Tracinda and Mr. Kerkorian could
have sold in the tender offer had they elected to participate and assuming
full participation. The potential sale of shares by Mr. Kerkorian will be
made only pursuant to a prospectus. Any such shares will only be sold after
completion of the tender offer in the open market or through privately
negotiated transactions as market conditions warrant.
Assuming the repurchase of 6,000,000 shares by MGM Grand and the public
sale by Mr. Kerkorian of 3,894,406 shares, Tracinda and Mr. Kerkorian would
collectively own approximately 61% of the outstanding MGM Grand common stock,
which is approximately the same percentage they currently own.
MGM Grand will finance the tender offer through available cash, cash flow
from operations and, to the extent necessary, its existing credit facility.
J. Terrence Lanni, Chairman and Chief Executive Officer, said: “We
continue to experience strong operating results and maintain one of the
strongest balance sheets in the industry. By implementing the final part of
our 12,000,000 share repurchase program, we are providing value to those
shareholders who wish to dispose of a portion of their holdings. At the same
time, we have the financial strength to continue to execute our aggressive
Alex Yemenidjian, President, said: “Our substantial capital investments in
`The City of Entertainment` in Las Vegas and in our interim casino in Detroit
are substantially complete and, consequently, we anticipate generating
significant free cash flow from our Nevada and Detroit operations beginning in
the fall of this year.”