Kerkorian’s Tracinda selling nearly $500M worth of MGM stock to UBS
Tracinda Corp., the fund managing the wealth of the late Kirk Kerkorian, is selling nearly $500 million worth of MGM Resorts International stock to UBS AG after the shares rallied, triggering a June deal reached with the Swiss-based bank.
Tracinda is selling 2 million shares per day over the course of 10 days to UBS at $23.94 apiece as part of a European style “covered call agreement” that expires this month. The selling commenced on Feb. 7 and will end on Feb. 21, assuming the shares stay above the $23.94 strike price.
UBS agreed on June 13, to pay Tracinda $2.12 per share, or $42.4 million, for the option to buy up to 20 million shares at the $23.94 price over the course of 10 days starting Feb. 7.
MGM shares have rallied about 20 percent since the June agreement, climbing as high as $29.10 on Feb. 7, amid optimism on global economic growth, a rebound in Macau gaming revenue and as MGM opened new casinos in the United States.
“Tracinda received a notice from UBS that the first four tranches of the Covered Call Options would be settled on February 10, 13, 14 and 15, respectively, at which times 2,000,000 shares of Common Stock were, or will be, transferred by Tracinda to UBS,” according to an MGM filing Monday with the Securities and Exchange Commission.
Tracinda will receive a total of $521 million, including option payments, assuming the entire 20 million shares are sold. UBS will earn about $60 million before taxes if MGM shares stay around Monday’s closing price of $29.16.
Kerkorian, who died in June 2015 at age 98, left instructions that Tracinda “execute an orderly disposition” of MGM shares. No time frame was given at the time. Tracinda owned 91. 2 million shares, or about 16 percent, at the time of Kerkorian’s death.
Tracinda sold 4 million shares valued at about $100 million last year, according to SEC documents. Upon completion of the deal with UBS, Tracinda will still own 67.2 million shares, or about 12 percent of the company. That stake is valued at $1.96 billion based on Monday’s closing price.
Contact Todd Prince at tprince@reviewjournal.com or 702-383-0386. Follow @toddprincetv on Twitter.
