MGM will sell 5 million new common shares to institutional investors in a move that could raise about $125 million for the company.
Santa Monica-based studio revealed in a regulatory filing Wednesday that it intends to draw the shares from a 30 million-share shelf registration it filed in May. Though MGM officially earmarked proceeds for “general corporate purposes,” the studio could eventually target the funds for film production or even debt reduction.
In any event, the move wasn’t prompted by any sort of concern over the studio’s cash position. At the end of June, MGM had $264 million in cash and unused credit of $600 million.
At an assumed share price of $25, the move would fetch $125 million, minus administrative fees. MGM shares closed down 81¢ at $25 on Wednesday.
The new shares will bring MGM’s total number outstanding to 211 million and raise its relatively small public float to 31 million. Billionaire financier Kirk Kerkorian holds 87% of the studio’s shares.