MGM Resorts International’s new chairman was one of four directors and executives who acquired stock in the casino giant Monday and Tuesday in an effort to boost the company’s share price, which has fallen roughly 82% since the middle of February.
In addition, acting MGM CEO Bill Hornbuckle signed a new management agreement in which he took a $300,000 a year pay cut. Hornbuckle, who became acting CEO on March 22, will earn $1.1 million in salary in 2020, but elected to take his salary for the rest of the year in restricted stock, rather than cash.
The contract expires in March 2024.
MGM’s nationwide casino portfolio of two dozen properties in six states, including 13 on the Las Vegas Strip, have been shuttered – along with the entire national casino industry – in an effort to slow the spread of the COVID-19 coronavirus pandemic.
The stock transactions and Hornbuckle’s new contract were announced in several filings with the Securities and Exchange Commission Tuesday.
Bill Hornbuckle, president of MGM Resorts International photographed for Premier Magazine on August 15, 2017. (R. Marsh Starks / UNLV Creative Services)
In two separate transactions, Hornbuckle acquired 41,000 shares of MGM Resorts, spending roughly $496,177. The shares were traded at between $11.99 and $12.02.
New MGM Chairman Paul Salem spent $3.92 million to acquire 340,000 shares at an average price of $11.53 on Monday.
Hornbuckle, who remains MGM’s president, and Salem, a company director, were elevated to their positions on March 22 by the departure of Jim Murren.
MGM board member Keith Meister spent $5.66 million to acquire 500,000 shares at an average price of $11.32 on Monday.
Meister was considered an activist investor in the company before he joined MGM’s board in January 2019. He is the general partner of Corvex Management, a New York-based hedge fund that owned 3% of MGM Resorts.
According to the SEC filing, Monday’s acquisition was completed through Corvex.
MGM Chief Financial Officer Corey Sanders also acquired shares in the company, spending approximately $300,000 in two trades for nearly 25,000 shares at between $11.96 and $12.08.
Shares of MGM Resorts closed Tuesday on the New York Stock Exchange at $11.80, up 27 cents or 2.34%.
Sanders also signed a new employment agreement with MGM Resorts on Tuesday, reducing his base salary by $250,000 to $1 million and agreeing to take 50% of his salary in restricted stock. Executive Vice President John McManus reduced his salary from $850,000 to $700,000 and also agreed to take 50% of the salary in restricted stock.
On Friday, MGM Resorts said the company believes it has a “strong liquidity position” to “weather this downturn and ultimately rebound” from the shutdown its casinos.
In a statement, MGM said its balance sheet has approximately $3.9 billion, including approximately $1.5 billion drawn under its revolving credit facility. Last year, MGM paid off nearly $3.9 billion in debt. The company doesn’t have any debt obligations due until 2022.
Hornbuckle said in a statement that the ‘MGM 2020’ cost-saving initiative that the company introduced last year helped strengthen the balance sheet.
“While this will undoubtedly have a significant negative effect on our business in the near term, we are well-positioned to emerge from the current crisis in light of our strong liquidity position and valuable asset portfolio,” he said.
Gaming analysts said MGM is burning through $14.4 million a day to maintain the company, which would give the corporation approximately nine to 10 months before it runs out of cash.
MGM said it was “making swift decisions” to reduce expenses. The company said 60% to 70% of its operating expenses are variable and it was looking at ways to minimize costs, such as hiring freezes, furloughs, and other job reductions. MGM also plans to delay 33% of its planned capital expenditures, such as renovations and improvements to its U.S. properties.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
