Merger value recalculated at $6.7 billion

Friday, March 24, 2000 | 11:04 a.m.

SUN STAFF AND WIRE REPORTS

MGM Grand Inc. of Las Vegas today filed with the Securities and Exchange Commission to sell up to $2.75 billion in debt securities, common stock and rights and guarantees to help finance its $6.7 billion merger with Mirage Resorts Inc.

Called a "shelf filing," the move allows the resort chain to register securities in advance and then sell them when financing needs arise or when market conditions warrant. Terms of the securities are usually announced at the time of the sale.

In the filing, MGM Grand said it anticipated offering $1.25 billion in new equity to help finance the merger. It has been widely speculated that these shares will be sold to controlling shareholder Kirk Kerkorian, though this was not specified in the document.

MGM Grand also has received commitments from a Bank of America-led syndicate for as much as $4 billion in revolving debt financing. B of A has also offered a $1 billion bridge loan to MGM Grand, which may be used in place of a bond offering, MGM Grand said.

The document officially placed the value of the Mirage Resorts buyout at $6.7 billion, including merger-related costs -- up from the previously reported $6.4 billion.

Slightly more than $3.5 billion of this purchase price is for Mirage's land holdings, MGM Grand said. By comparison, MGM Grand valued Mirage's buildings and equipment -- which include the resort hotels -- at $3.21 billion.

MGM Grand also said the $6.7 billion includes $515 million in goodwill, a term that generally refers to intangible factors such as brand names and business reputation.