Metro-Goldwyn-Mayer Inc. said it plans to sell 84.8 million shares for $8.25 each in a rights offering that lets majority owner Kirk Kerkorian inject millions more dollars into the money-losing Hollywood film studio.
Kerkorian will buy at least $596.2 million of the $700-million offering just two months after he paid $389 million to boost his MGM stake to 89.5%.
"The offering underscores Kerkorian's commitment to build the company," said Stewart Halpern, an ING Baring Furman Selz analyst, who has a "buy" rating on MGM.
MGM will use the funds to expand its TV business and finance the $250-million purchase of PolyGram's film library that can then be licensed to others. The moves will help support the company's ailing film studio.