This article was corrected on July 29, 2002.
NEW YORK — MGM said Friday that its board has approved a repurchase plan for up to 10 million shares to take advantage of the company’s faltering stock price.
“Extraordinary marketwide conditions have placed a value on our stock that we believe is significantly below the intrinsic value of our assets. It is impossible for us to ignore the financial opportunity that the markets have created,” said MGM chairman-CEO Alex Yemenidjian.
Stock purchases will be made from time to time in the open market, through block trades or otherwise, as market conditions warrant, MGM execs said, and will be financed from available cash on hand.
Yemenidjian acknowledged that the repurchase program runs counter to MGM’s long-term goal of boosting the company’s public float — the number of shares held by outside investors — but indicated the shares are so cheap that a buy-back was imperative.
MGM shares closed Friday down a nickel at $10 — well off a 52-week high of $23.25 on Jan. 15.
Kirk Kerkorian’s holding company Tracinda, which owns 77.2% of the studio, suspended its previously announced plan to purchase additional MGM shares pending completion, or termination, of the repurchase program.
The stock market’s recent losses have pushed many companies to consider stock buy-backs — if they have the cash. Viacom said last week that it had spent more than $400 million to buy 11 million shares in the first six months of the year.