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Daily News
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MGM Offers Dividend
In advance of the studio's anticipated sale to Sony, MGM will offer its stockholders a one-time cash dividend of $8 per common share.
Wednesday, April 28, 2004
By Lisa Johnson
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Before Metro-Goldwyn-Mayer Inc. (NYSE:MGM) undergoes a likely sale to Sony, the MGM Board of Directors has declared a one-time cash dividend of $8.00 per common share.
The dividend will be payable on May 17, 2004, to stockholders of record as of the close of business on May 7, 2004. Due to the magnitude of the dividend, the NYSE will defer the ex-dividend date to one day following the payment date.
As a result, common shareholders who sell their shares after the record date, and through the payment date, also will be selling their right to receive the dividend.
"Our strong cash flow and our confidence in our ability to continue to generate strong cash flow are the principal reasons why we decided to reward our shareholders with an extraordinary dividend of $8.00 per share," said Alex Yemenidjian, MGM's chairman and chief executive officer. "Future cash flows give us significant operating flexibility for both de-leveraging and investing in our operations, and we continue to have ready access to the equity markets and ample additional borrowing capacity should strategic opportunities present themselves."
Regarding the company's refinanced credit facility, Yemenidjian went on to say: "Our newly refinanced credit facility, which consists of $2 billion in term loans and a $400 million revolving line of credit, exceeds our previous facility yet carries a lower interest-rate spread. The fact that the facility was significantly over-subscribed represents a vote of confidence by our lenders in the future strength of our core business."
MGM expects that the entire dividend should qualify as a tax-free return of capital to shareholders. Nevertheless, shareholders are encouraged to consult with their own tax and financial advisors regarding the implications of this dividend on their individual tax position.
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