MGM is going to sell 81 million shares-with Kirk Kerkorian's Tracinda Corp. buying 10%. They will also pay back $1.04 billion of notes due this year; and pay back $750 million under their credit facility by raising another billion and a half, by a refi of the Bellagio and Mirage debt.
I don't think this refinancing was in the shorts playbook.
Last week Friday, Kerkorian did 40% of the 150 million share secondary of DPTR at $1.5. Friday morning, in the pre-market, I picked up stock at $1.33, and booked the free money.
Don't think that daytraders won't be all over this MGM deal.
It's the Merrill Lynch REIT model. Upgrade the REIT, do a follow on offering, to help deleverage the banks credit lines, and use the equity proceeds to pay down debt.
It was the same here. Merrill's leading the books, and it upgraded MGM last week in a 15 page report. (You needed that many pages because they were disbanding their previous $1 target and report and upping their price target $15!)
Payback was some nice underwriting fees, and the shorts providing liquidity!
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