NEW YORK — May 17 will be payday for MGM shareholders. The Lion’s board of directors announced late Monday that all stockholders registered as of May 7 will get a one-time cash dividend of $8 per share at the close of business May 17.
Shareholder Kirk Kerkorian, through his Tracinda Corp., controls just under 75% of MGM shares and stands to haul in some $1.4 billion from the dividend payment.
MGM and its 4,000 title library is currently in play as Sony recently disclosed it is putting together an offer to buy out MGM in an estimated $5 billion deal (around $21 a share) that would be primarily financed by private equity backers Providence Equity Partners and Texas Pacific.
“Our strong cash flow and our confidence in our ability to continue to generate strong cash flow are the principal reasons why we decided to reward our shareholders with an extraordinary dividend of $8 per share,” said MGM chairman-CEO Alex Yemenidjian. He said MGM will still have sufficient operating and financial flexibility despite the new debt load the company is taking on to pay the hefty dividend, adding that it still has “ample additional borrowing capacity should strategic opportunities present themselves.”
With roughly 375 million shares outstanding, MGM is likely to take on some $1.9 billion in debt to finance the dividend on top of its relatively minimal $110 million in current net debt, say analysts.