he news came as JPMorgan upgraded the stock to "overweight" from "neutral." The brokerage said the improved liquidity position of the company following its stock and bond offerings should alleviate any bankruptcy-risk concerns for at least two years.
In a filing with the US Securities and Exchange Commission, Kerkorian's Tracinda Corp investment vehicle disclosed it had acquired an additional 14.3 million shares of the casino operator for us$ 7 each.
MGM shares were up about 7.7 % at us$ 8.26 in morning New York Stock Exchange trade. Before this purchase, Kerkorian had reported a 53.8 % stake in the Number 2 casino operator, which has worked to avoid defaulting on its us$ 14 billion debt load.
The move comes one week after MGM's lenders agreed to let the company raise up to us$ 2.5 billion by selling new stock and bonds. Last week, MGM said it had completed a us$ 1 billion public offering through the issuance of 143 million shares.
Tracinda intends to use a credit facility to fund this purchase, according to the filing, and has agreed not to sell or transfer shares during the next 60 days, with limited exceptions. In a note upgrading MGM, J.P. Morgan said the company's improved liquidity should enable the company "to fund all bond maturities this year and next."
Shares of casino stocks have risen lately amid rising confidence major companies will avoid bankruptcy in the near term. During recent earnings conference calls, executives of MGM and Las Vegas Sands suggested the travel and gaming slump may be bottoming.
Las Vegas Sands CEO Sheldon Adelson, for instance, in early May cited "recent positive trends in gaming volumes and an improving environment for future group business bookings."
Shares of Las Vegas Sands were up 3.5 % on the New York Stock Exchange in morning trading on Monday, while Wynn Resorts added 3 % on Nasdaq. At Friday's close, MGM shares had more than tripled since the stock market's 12-year low in early March.