MGM Seeks as Much as $322 Million in IPO

Metro-Goldwyn-Mayer Inc. said it plans to sell 12.5 million shares with an expected price range of $20 to $23 a share in an initial public offering to raise money for debt reduction.

The company said in a filing with the Securities and Exchange Commission that it would raise as much as $322 million in the IPO, including shares that may be issued to cover over-allotments to investors. The company plans to sell 10 million shares in the U.S. and Canada and 2.5 million shares elsewhere.

MGM said, when it first filed in mid-September to go public, that the IPO would be worth at most $250 million, though it didn’t give an expected price range or number of shares.

Kirk Kerkorian’s closely held Tracinda Group, which now owns about 69% of MGM’s stock, will own about 56% after the IPO. Together, Tracinda, Australia’s Seven Network Ltd. and MGM’s directors and officers will own about 81% of the company’s common stock after the share sale.

Metro Pictures, Goldwyn Pictures and Louis B. Mayer Productions merged in 1924 to form Metro-Goldwyn-Mayer. The company went through a number of management and ownership changes over the years, and was finally purchased by Tracinda, Seven and the senior management of MGM in October 1996 for $1.3 billion.

The movie and television studio, producer of the James Bond movies and such films as “The Bird Cage” and “Leaving Las Vegas,” said it expects to receive about $250 million in proceeds from the IPO, after fees and if the sale is made in the middle of the expected price range.

Santa Monica-based MGM hasn’t made a profit since 1988, and it had a loss of $55.5 million, or 85 cents a share, in the first half of 1997. The company said it doesn’t expect to be profitable for several years.

MGM said it has submitted “a non-binding indication of interest” in acquiring a film library with about 1,000 titles, with a purchase price of less than $200 million.

The company said it will oppose plans recently announced by Sony Pictures Entertainment Inc. to release new James Bond films. MGM said it owns the copyright to James Bond films jointly with Danjaq.

The IPO represents a 19% stake in the company, which will have 65.2 million shares outstanding. MGM is valued at as much as $1.5 billion without the over-allotment shares, based on the expected price range.

Merrill Lynch & Co. and J.P. Morgan & Co. will manage the IPO, along with Bear, Stearns & Co. and Furman Selz. Shares will trade on the New York Stock Exchange under the symbol MGM.