Cash raised will be used to pay debts
NEW YORK — MGM will kick off a road show this week to promote a $750 million stock offering planned for later this month or early October.
The sale of the new shares is meant to raise cash as well as to increase the studio’s shareholder base. Currently, billionaire Kirk Kerkorian owns 90% of MGM stock. If the offering is completely subscribed, and assuming a sale price of about $20 a share, his stake will fall to 72% and the public float will rise to 28% from 10%.
Kerkorian’s holding company Tracinda Corp. has agreed to take up any shares not purchased by other investors in the offering.
h to pay down debt
The cash raised will be used to pay down debt and for general corporate purposes.
The road show, where company execs meet with institutional investors and money managers across the U.S. and overseas, begins Tuesday. It was delayed from an original start date earlier this month.
Meanwhile, Wall Street sources say talks are progressing, albeit slowly, with Cablevision Systems’ Rainbow Media Group, which owns cable channels Bravo, AMC, The Independent Film Channel and others. Discussions with Rainbow are said to encompass a range of possibilities, such as Rainbow venues drawing on MGM’s library, creating a new joint venture, or, perhaps rebranding a network to include the MGM name.
MGM shares fell 4.2% Friday to $19.94.