MGM panel to study Tracinda's move
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Tracinda, the investment arm of billionaire Kirk Kerkorian, 89, owns 56 percent of MGM Mirage shares.
The board committee, comprised of non-management directors not affiliated with Tracinda, will study the matter and consider strategic alternatives, the company said. Tracinda, the investment arm of billionaire Kirk Kerkorian, 89, owns 56 percent of MGM Mirage shares.
"There can be no assurances that this process will result in any specific transactions," the company said in a statement.
Tracinda announced Monday that it wanted to purchase The Bellagio Hotel and Casino and CityCenter properties, sending shares skyrocketing 27 percent, or us$ 17.03, to us$ 79.98 Tuesday. Shares retreated 13 cents to us$ 79.85 in after-hours trading.
Tracinda also said in its filing with the Securities and Exchange Commission that it wants to pursue "strategic alternatives" related to its majority stake in MGM Mirage.
The board members on the committee are Roland Hernandez, Rose McKinney-James and former Nevada Gov. Kenny Guinn, said a person familiar with the situation who insisted on anonymity because the person was not authorized to speak about it.
Chief Executive Terry Lanni did not accept questions about the Tracinda announcement during an earlier shareholders meeting. Kerkorian was present at the shareholders meeting but said nothing about the matter. He also attended the board meeting as a member.
Bellagio is the jewel in the crown of MGM Mirage's Las Vegas Strip properties, accounting for roughly 20 percent of its operating profits. CityCenter is its us$ 7.4 billion megaresort being built next door and set to open in late 2009.
Tracinda's announcement prompted credit ratings agencies to announce they were watching developments closely. Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings gave MGM Mirage a negative outlook because of fears that a Tracinda-led leveraged buyout would add debt to the company.
While analysts speculated the move could be a step toward making MGM Mirage more of a casino management company rather than an owner-operator, many agreed it would also prompt a widespread re-evaluation of the company's assets, which includes 19 properties in Nevada, Mississippi and Michigan and 865 acres of prime Las Vegas real estate.