* Offering priced at $12.65 per share
* MGM could raise close to $600 million
* Shares down 11.1 percent
(Adds stock downgrade, updates share price)
LOS ANGELES, Oct 13 (Reuters) - MGM Resorts International
(MGM.N) shares fell more than 11 percent on Wednesday as both
the largest casino operator on the Las Vegas Strip and its
biggest shareholder sell stock in the company.
MGM and Tracinda Corp, the investment vehicle of
billionaire Kirk Kerkorian, said late on Tuesday they would
sell up to 47 million and 32 million shares, respectively. The
offer price was set at $12.65 -- 7 percent below Tuesday's
close.
The new shares could raise close to $600 million for MGM --
which is focused on paying down $12.9 billion in debt -- but
will also dilute the holdings of current shareholders by around
10 percent.
The sale will also cut Tracinda's stake to about 30 percent
from the current 37 percent. Kerkorian once owned more than
half of MGM, but the holdings fell after a May 2009 stock
offering.
"This was unexpected, timing is curious, and reason(s)
unclear," Deutsche Bank analyst Chris Woronka said in a
research note, referring to the Tracinda sale. "MGM's offering
should bolster liquidity, but we believe some investors would
prefer to see a $1.5 to $2 billion-plus deal that more fully
addresses debt maturities through 2013."
MGM also reported on Wednesday that preliminary
third-quarter results were lackluster, but largely in line with
Wall Street expectations.
Soleil Securities downgraded MGM to "hold" from "buy,"
citing operating results that do not support the notion of an
accelerating recovery on the Las Vegas Strip, where yet another
new resort, the Cosmopolitan, is slated to open in December.
The casino industry has been hit hard by the recession and
global financial crisis, which led to a sharp drop in gambling
revenue and hotel room rates.
Investors in MGM, and other Vegas casino operators
including Wynn Resorts Ltd (WYNN.O) and Las Vegas Sands Corp
(LVS.N), were buoyed by Nevada's report last week that Strip
casinos won 21 percent more money in August than a year
earlier.
But MGM's write-offs for the quarter -- another $182
million for impairment to the CityCenter, the $8.5 billion
project that opened on the Las Vegas Strip in December, and $46
million for CityCenter condominiums -- were worse than
expected, according to Janet Brashear at Sanford Bernstein.
"Continued write-offs make the financial picture more
uncertain, especially as it relates to CityCenter liability;
however, the pending Borgata sales represents progress in
resolving loose ends," she said in a research note.
MGM said it found a buyer for its 50 percent stake in the
Borgata resort in Atlantic City, New Jersey, at a price that
would generate around $250 million.
MGM has been looking to sell its stake after New Jersey
regulators questioned the suitability of Pansy Ho, the
company's joint venture partner in China's Macau.
Barclays Capital, the investment banking subsidiary of
Barclays Plc (BARC.L), is the sole underwriter for MGM's stock
offering.
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