MGM Mirage looks to raise $2.5 billion in capital

Casino operator MGM Mirage said Wednesday that it would tap its majority shareholder, billionaire Kirk Kerkorian, and use two of its resorts as collateral to help raise $2.5 billion in capital as it fights to save itself and pay down some of its $14 billion in debt.

A series of moves -- including a sixth amendment to its credit agreement, an offering of 81 million new shares and a plan to buy back $1.05 billion in debt due this year -- should help the Las Vegas company get through the recession.

Investors weren’t impressed. Shares of MGM Mirage fell $3.70, or 29.8%, to $8.70 on Wednesday.

Company executives said the stock offering, through which they hope to raise about $1 billion, put MGM Mirage in a quiet period. But they said Kerkorian planned to buy 10% of the 81 million newly issued MGM Mirage shares, or 8.1 million shares.

Kerkorian’s Beverly Hills-based Tracinda Corp. holds about 53.8% of MGM Mirage’s stock. MGM Mirage had about 276.6 million shares outstanding May 5, according to a filing with the Securities and Exchange Commission.

MGM Mirage said it also planned a private placement of $1.5 billion in notes secured by the Bellagio and Mirage resorts on the Las Vegas Strip. That effectively takes the casinos off the selling block for MGM Mirage.