It's been a tumultuous May for the debt-laden MGM Mirage and now its public face, chief executive Kirk Kerkorian, lost his controlling interest last week after the company offered 165 million shares of stock in an equity offering to raise money. Kerkorian bought 14.3 million shares, costing around $100 million, but still saw his stake drop from 54 to 38 percent. (The Los Angeles Business Journal estimated that Kerkorian lost approximately $5.4 billion of his net worth this year, primarily due to MGM Mirage's financial woes and investments in Ford Motor Co.)
But there's still more. the New Jersey Division of Gaming Enforcement now wants MGM Mirage, who owns half of the Borgata Hotel Casino & Spa, to either break up with its Macao joint venture partner or possibly give up the most profitable casino in Atlantic City. Apparently MGM Mirage is partnered with Pansy Ho, daughter of Stanley Ho -- a businessman with suspected ties to organized crime. The gaming officials called the partnership "unsuitable" in federal regulatory filings. The worst case scenario is that the state could demand severing either business relationship, although some officials say the open investigation is still in early stages. Ho has previously said in Nevada state hearings, where she was cleared of any ties to organized crime, that she works independently from her father.
I almost wonder if Kerkorian has broken a few mirrors or had some black cats cross his path. First, he and MGM Mirage emerge from the CityCenter debacle almost unscathed, with both the project and themselves still moving forward and making some progress on their $13.5 billion debt. It seemed as if the company was on the mend, which makes the timing of both reports coming out today disheartening to investors and consumers alike. Without the iconic Kerkorian in charge, will MGM Mirage be eaten up by private equity firms and its empire diminished?
I imagine this is only the beginning of the new MGM Mirage saga, and we will learn much more in the coming months.
Photo of Pansy Ho (and Cyril Takayama) courtesy of Macau.com