Las Vegas (Reuters) – MGM Mirage Inc. said on Tuesday it formed a committee to consider a proposal by Kirk Kerkorian’s Tracinda Corp., its majority shareholder, to buy its key Las Vegas properties and explore alternatives for the part of MGM it does not own.
Tracinda, which holds 56 percent of the casino company, said on Monday it would consider a financial restructuring or other outcomes for the remainder of MGM Mirage. Tracinda also intends to buy crown jewels Bellagio and CityCenter, a USD 7.4 billion project now under construction on the Las Vegas Strip.
People familiar with the company said the committee includes independent directors Roland Hernandez, Rose McKinney-James and former Nevada Gov. Kenny Guinn, who was elected to the board at the company’s shareholder meeting on Tuesday. The trio are not affiliated with Tracinda.
Las Vegas Sands Corp. President William Weidner would not make a bet on the outcome of MGM-Tracinda negotiations, but called Kerkorian „a master at drawing attention“ to gaming properties that are undervalued by Wall Street.
Weidner said Sands would consider buying some of the MGM Mirage assets, including the Mirage and Treasure Island resorts across the street from Sands‘ flagship, Venetian Las Vegas, and the forthcoming Palazzo Resort-Casino due to open by year-end.
„It all depends on what the values might be,“ Weidner said, when asked specifically about Mirage and Treasure Island.
„We have lots of our eggs in Asia, we have lots of growth coming out of Asia. We think there will be more venues to develop in Asia,“ he said.
„We want to position ourselves to be the people for those types of developments. Our fundamental strategy still remains filling the pipeline with future development and building our value from the ground up,“ Weidner said.
Time to Cash out?
Annual meeting attendees offered mixed views on the salvo from Kerkorian, who was also among the bidders for DaimlerChrysler’s money-losing Chrysler unit.
Some expressed concern that MGM‘s majority shareholder could walk off with two of the company’s most precious assets or, perhaps, the entire company. MGM shares gained 27 percent, or USD 17.03, to close at USD 79.98 on the New York Stock Exchange.
„I think it’s an insider thing, an agreement between the top people to eventually buy out the whole thing,“ said William Osbourn, 77, of Las Vegas, who said he was also an investor in Steve Wynn’s Mirage Resorts in the 1990s before the Kerkorian-led MGM Grand bought it to create MGM Mirage.
„I’d much rather just continue owning my stock,“ he added.
Others, like Linda Rhodes, hoped to cash in on soaring land prices on the Strip, where some property has recently sold for USD 30 million an acre.
„I think if we can get a good return on our investments right now, that’s even better than waiting to see if CityCenter works out as well as they think it will,“ said Rhodes, of Los Angeles.
„If it unlocks the value of the property and we get a good price as shareholders, that’s business,“ she said.