MGM to pay Las Vegas billionaire $ 1.6bn dividend

The Times (London)
March 17, 2004, Wednesday

MGM to pay Las Vegas billionaire $ 1.6bn dividend

James Doran Wall Street Correspondent

Kirk Kerkorian, the billionaire Las Vegas casino and hotel magnate,
is poised for a big win in Hollywood as Metro-Goldwyn-Mayer, the
movie studio he controls, contemplates paying him a special dividend
worth as much as $ 1.6 billion (£880 million).

MGM said on Monday that it was seriously considering a one-off
payment to shareholders to keep them happy.

The company does not have very many shareholders to placate, however,
as Mr Kerkorian owns 74 per cent of the 235 million shares in

Sources close to the movie studio behind the James Bond franchise
said that the company was considering a payment of between $ 6 and $
9 a share. Such a paymentwould reap between $ 1 billion and $ 1.6
billion for Mr Kerkorian.

If MGM pays out at the highest end of expectations Mr Kerkorian will
see his $ 3.4 billion fortune swell to $ 5 billion.

MGM has been under pressure to offer a bonus to investors since it
failed to buy the entertainment assets of Vivendi Universal, the
French utility company, that were eventually bought by NBC, the US

Alex Yemenidjian, the MGM chairman and chief executive, said in a
statement that the company had not made a decision about the special
dividend, which would mark the first shareholder payout since the
company floated in 1997.

But he added: “Our management remains committed to sharing the
company’s wealth with our shareholders.”

Mr Kerkorian, 86, has bought and sold MGM and pieces of it many times
over the past 35 years. It is estimated that he has invested some $ 3
billion in the company in total.

While the special dividend is the most likely course of action for
MGM, analysts believe the company is still considering other options
in its bid to keep Mr Kerkorian happy.

Many have said that the movie studio, which is awash with cash, could
seek to go private, or pursue a sale.

MGM’s 2003 revenues were about $ 1.7 billion, mainly because of
successful DVD sales of the films Legally Blonde 2: Red White and
Blonde and Jeepers Creepers 2.

The company retired all its debt last year and saw record cash flow
of about $ 193 million. It expects $ 600 million to $ 900 million of
free cash flow until2006.

Mr Kerkorian is said to prefer some sort of share-based transaction
because such a deal would be more tax advantageous.

The billionaire investor has not always been the consummate dealmaker
he is today.

The son of Armenian immigrants, he dropped out of school at the age
of nine to become a street newspaper vendor.

He ran away to become a pilot in the RAF during the Second World War
before returning to America to set up a private airline.

Today he is the 97th richest man in the world and owner of the MGM
Grand Hotel and Casino in Las Vegas through his investment company,
which is named Tracinda Corporation after his daughters Tracy and