Move would mean a $1.39 bil windfall for Kerkorian

MGM management confirmed Tuesday studio’s plans to recommend a one-time dividend of $8 a share (Daily Variety, March 30).

A brief Lion statement said only that directors will be asked to approve the plan after a related credit facility has been buttoned up by the end of April. But it’s expected the MGM board will vote on the dividend around the time that the Century City-based company holds its annual meeting in L.A. in early May.

The dividend would be paid to shareholders of record by a date in May yet to be designated.

Speculation over reasons for the move — which would mean a $1.39 billion windfall for 74% stakeholder Kirk Kerkorian — has covered a host of scenarios. Some say plan marks a first step toward taking the studio private while others suggest it’s simply a move to deliver a return-on-investment to MGM’s majority shareholder.

Lion plans to refinance its current credit facility in the process, using studio’s longtime bankers JPMorgan and Bank of America to construct a new $2.4 billion financing. About $2 billion of the refi has been tagged for the shareholder dividend.

Studio’s confirmation of its dividend plan came after the close of market trading, with MGM shares unchanged on the session at $17.48. But the stock is likely to surge today, as shares traded higher in after-hours activity.

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