Tuesday, Aug. 25, 2009 | 2:26 p.m.
MGM Mirage on Tuesday issued its first formal response to an Aug. 19 shareholder lawsuit alleging the company and current and former officers misled shareholders about its financial prospects.
"The company believes that the allegations set forth in the complaint are without merit. The company will vigorously defend against these claims but there can be no assurance that the outcome of the proceedings will not have a material adverse effect on the company," MGM Mirage said in a filing with the Securities and Exchange Commission.
Shareholder Robert Lowinger is seeking class-action status for the lawsuit, filed in U.S. District Court for Nevada. It was filed by three law firms including Coughlin Stoia Geller Rudman & Robbins LLP.
On Aug. 19, multiple law firms around the country announced MGM Mirage was being sued. But court records show the Lowinger suit is the only one that has been filed in the nation's federal courts.
The suit claims shareholders suffered because of a decline in MGM Mirage's stock price because the company and executives made false and misleading statements about the company's financial outlook.
Like other gaming companies, MGM Mirage has been hurt by the recession and earlier this year its auditors expressed concern about its viability because of business trends and its hefty debt obligations.
But MGM Mirage has rebuilt its balance sheet with a stock issuance and other measures; and has finalized financing for the massive $8.5 billion CityCenter complex in Las Vegas; and is no longer considered to be at risk of going into bankruptcy.
Coughlin Stoia, in the meantime, has been sending this e-mail to shareholders inquiring about the lawsuit:
"Thank you for contacting Coughlin Stoia Geller Rudman & Robbins LLP ("Coughlin Stoia") regarding your losses in the MGM matter. As you know by now, a class action has been commenced in the United States District Court for the District of Nevada on behalf of purchasers of MGM Mirage ("MGM" or the "Company") (NYSE: MGM) common stock between August 2, 2007 and March 5, 2009, inclusive (the Class Period).
"If you are a member of the class, meaning if you purchased the above-referenced stock during the specified Class Period, you need not take any action now. You are automatically included in the class action filed by Coughlin Stoia. Later, if any recovery is obtained, you will have the option of submitting your trading information in order to receive a portion of the recovery you may be entitled to or you may "opt out" of the class.
"Generally, there is no out-of-pocket cost to any class member regardless of the outcome. We primarily work on a contingent fee basis, where we pay all costs and expenses. If we are successful in obtaining a recovery on behalf of class members, we will ask the court to award us fees and expenses from the recovery. The amount of the fee award will depend on a number of factors, including the size of the recovery and the duration and complexity of the litigation.
"To be clear: you need not take any action at this time to participate in the class action filed by Coughlin Stoia.
"Thank you for contacting our firm."