MGM Plans Stock Sale; Borgata Write-Down On Tap

   DOW JONES NEWSWIRES 
 

MGM Resorts International (MGM) disclosed plans for it and the casino company's largest shareholders to sell at least 68.7 million shares as it predicted a smaller core third-quarter loss than Wall Street was expecting.

Shares dropped 5.4% to $12.87 in after-hours trading as the casino operator said it will sell at least 40.9 million shares while Tracinda Corp. offers a minimum 27.8 million. There are some 441 million shares outstanding. The stock through the close was up 49% this year.

Proceeds from MGM's sale will go toward debt repayment, a prime source of fresh capital that corporations have been raising the past year from stock sales. MGM has been saddled for some time by a heavy debt load, in part from borrowing heavily to finance its Asia expansion and upgrade Las Vegas casinos.

The company also said Tuesday it received an offer of slightly less than $250 million for its 50% stake in the Borgata Hotel Casino & Spa in Atlantic City, N.J., and has submitted the offer to its partner, Boyd Gaming Corp. (BYD). Because the offer is less than the carrying value of MGM's Borgata investment, it will post a $129 million third-quarter write-down.

Meanwhile, MGM projected a third-quarter loss of 72 cents a share, including write-downs of 51 cents. Analysts on average were looking for a 24-cent loss, according to a poll by Thomson Reuters; such estimates typically exclude items such as write-downs.

It added revenue per available room from its Las Vegas Strip properties fell 2% as companywide casino revenue dropped 9%.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]