SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment
No. __)
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Soliciting Material Under Rule 14a-12 |
MGM Resorts International
(Name of Registrant as Specified In Its Charter)
Land & Buildings Investment Management,
LLC
Land & Buildings Capital Growth Fund,
L.P.
Jonathan Litt
Matthew J. Hart
Richard Kincaid
Marc A. Weisman
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
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box):
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On May 7, 2015, Land & Buildings Investment Management,
LLC and its affiliates (collectively, "Land & Buildings") issued a press release (the "Press Release")
highlighting Land & Buildings' belief that there is a need for an increased operational focus at MGM Resorts International.
Also on May 7, 2015, Land & Buildings distributed a similar version of the Press Release to Land & Buildings' investors
and certain other persons (the "Distribution"). Copies of the Press Release and Distribution are filed herewith as Exhibit
1 and Exhibit 2, respectively.
EXHIBIT 1
Land and Buildings Highlights Need For Increased
Operational Focus at MGM Resorts
| | – MGM’s First Quarter Earnings Results
Highlight the Need for Fresh Perspectives to Improve Operational Performance – |
| | – Las Vegas RevPAR in the First Quarter
Missed the Company’s Guidance and We Believe a Lack of Expense Control Led to a 6% Decline in EBITDA in at the Company’s
Wholly-owned Las Vegas Strip Assets – |
– Since March 20, 2015, When the Board Just
Said ‘No’ and Rejected the Proposed Nominations of Our Four Nominees to the Company's Board, MGM’s Share Price
Has Fallen by 14%, Eroding $1.9 Billion of Shareholder Value –
| |
– Vote for Land and Buildings’ Four Highly-Qualified Board Nominees on the GOLD Proxy Card Today
For a Fresh Perspective on Operations, Amongst Other Areas – |
Stamford, CT— (May 7, 2015) – Land and Buildings,
an investment firm specializing in publicly traded real estate and real estate related securities, and a shareholder of MGM
Resorts International (NYSE: MGM) (“MGM” or the “Company”), today issued the following press release highlighting
what it sees as the urgent need for increased operational focus at MGM, as evidenced by the Company’s first quarter earnings
report issued on March 4, 2015:
MGM Resorts’ Disappointing Operating Results in
the First Quarter Underscore the Need for Change
MGM’s first quarter 2015 Las Vegas operating results,
in our view, were highly troubling and support the need for greater operational focus. In particular, during the first quarter:
- RevPAR at the Company’s wholly-owned Las Vegas
Strip properties rose 1%, falling short of management’s guidance of 2%-3% growth, an outlook that was given more than halfway
through the first quarter on February 17, 2015.
- EBITDA at the Company’s wholly-owned Las Vegas
Strip properties declined by 6%, or $21 million, from a year ago, despite revenues being flat year-over-year.
- Despite a 3% increase in revenues at the Company’s
“non-luxury” Las Vegas assetsi, EBITDA declined 2%, highlighting the failure of the Company to control expenses
and drive EBITDA higher, in our view.
In response to MGM’s first quarter performance, Deutsche Bank
noted the following, which in our view highlights the lack of focus on expense control at MGM:
“In 2014, MGM’s LV Strip same-store operations
had recovered to 86% of prior peak net revenue (2007), but only 66% of prior peak EBITDA…What we struggle with, however,
is the meaningful dichotomy between two Companies that are operating in the same labor / fixed cost environment, and showing such
stark expense control deltas. To demonstrate this point, we look at BYD …Unlike MGM, who has experienced expense growth
in every quarter since the 3Q13, BYD opex grew just once over that span, a 70 bps increase in the 2Q14…we believe it is
indicative of our view that MGM should at the very least have some low hanging fruit on the cost side in the Strip operations.”
We are deeply concerned about what we view as MGM’s lack
of focus on expense control in Las Vegas, as evidenced by Chairman and CEO Jim Murren’s statement on the Company’s
earnings call on May 4, 2015 that, “we feel good about how we’re managing costs,”. The Company appears, in our
view, to be more focused on new development rather than maximizing profits at irreplaceable assets they already own in Las Vegas
and improving its balance sheet by prioritizing the paying off of high interest rate debt.
L&B Board Nominees Would Provide Fresh Perspective
on Operations, Amongst Other Areas
We believe our director nominees, if elected, would help ensure
that the MGM Board and management honestly inquire into the Company’s operations with an eye toward reducing expenses. The
Land and Buildings’ nominees could seek to better align shareholders’ and management’s interests by including,
as part of evaluating the management team’s performance and annual bonus compensation, an assessment of operating metrics,
such as EBITDA margins and EBITDA flow-through, as opposed to the current annual incentive, which is tied solely to EBITDA.
Improving operating performance can have a significant impact
on MGM’s share price, as evidenced by the fact that a 200 basis point improvement in EBITDA margin could translate into $4
per share of stock price, or approximately 20% price appreciation. Land and Buildings' nominees will not only ensure that the Company
undertakes a clear-eyed assessment of its operations but also other areas that Land and Buildings has highlighted as opportunities,
including but not limited to: unlocking the value of MGM's real estate, selling non-core assets and deleveraging the balance sheet.
Land and Buildings’ slate of proposed nominees possesses track
records that speak for themselves:
| ü | Matthew J. Hart: Former President, COO and CFO, Hilton Hotels
Corporation (NYSE: HLT), and former CFO, Host Marriott Corporation |
| ü | Richard Kincaid: Former President and CEO of Equity Office
Properties Trust |
| ü | Jonathan Litt: Founder and CIO of Land and Buildings |
| ü | Marc Weisman: Former Partner of Weil Gotshal & Manges,
and former CFO of Oppenheimer & Co., Inc. |
Vote on the GOLD proxy card today.
##
About Land and Buildings:
Land and Buildings is a registered investment manager specializing
in publicly traded real estate and real estate related securities. Land and Buildings seeks to deliver attractive risk adjusted
returns by opportunistically investing in securities of global real estate and real estate related companies, leveraging its investment
professionals' deep experience, research expertise and industry relationships.
Investor Contact:
Scott Winter / Jonathan Salzberger
Innisfree M&A Incorporated
212-750-5833
Media Contact:
Elliot Sloane / Dan Zacchei
Sloane & Company
212-486-9500
Esloane@sloanepr.com or
Dzacchei@sloanepr.com
LAND & BUILDINGS CAPITAL GROWTH FUND, L.P., LAND & BUILDINGS
INVESTMENT MANAGEMENT, LLC AND JONATHAN LITT (COLLECTIVELY, "LAND & BUILDINGS") AND MATTHEW J. HART, RICHARD KINCAID
AND MARC A. WEISMAN (TOGETHER WITH LAND & BUILDINGS, THE "PARTICIPANTS") FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "SEC") ON APRIL 16, 2015 A DEFINITIVE PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY CARD TO BE USED IN CONNECTION
WITH THE PARTICIPANTS' SOLICITATION OF PROXIES FROM THE STOCKHOLDERS OF MGM RESORTS INTERNATIONAL (THE "COMPANY") FOR
USE AT THE COMPANY'S 2015 ANNUAL MEETING OF STOCKHOLDERS (THE "PROXY SOLICITATION"). ALL STOCKHOLDERS OF THE COMPANY
ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE PROXY SOLICITATION BECAUSE THEY CONTAIN IMPORTANT
INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS. THE DEFINITIVE PROXY STATEMENT AND AN ACCOMPANYING PROXY
CARD HAVE BEEN FURNISHED TO SOME OR ALL OF THE COMPANY'S STOCKHOLDERS AND ARE, ALONG WITH OTHER RELEVANT DOCUMENTS, AVAILABLE AT
NO CHARGE ON THE SEC'S WEBSITE AT HTTP://WWW.SEC.GOV/. IN ADDITION, INNISFREE M&A INCORPORATED, LAND & BUILDING'S PROXY
SOLICITOR, WILL PROVIDE COPIES OF THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD WITHOUT CHARGE UPON REQUEST.
_____________________________
1 Defined as Circus,
Circus, Excalibur, Luxor, Monte Carlo, and New York New York.
EXHIBIT 2
Land and Buildings Highlights Need For Increased
Operational Focus at MGM Resorts
| | – MGM’s First Quarter
Earnings Results Highlight the Need for Fresh Perspectives to Improve Operational Performance – |
| | – Las Vegas RevPAR in the First
Quarter Missed the Company’s Guidance and We Believe a Lack of Expense Control Led to a 6% Decline in EBITDA in at the
Company’s Wholly-owned Las Vegas Strip Assets – |
– Since March 20, 2015, When the Board Just
Said ‘No’ and Rejected the Proposed Nominations of Our Four Nominees to the Company's Board, MGM’s Share Price
Has Fallen by 14%, Eroding $1.9 Billion of Shareholder Value –
| | – Vote for Land and
Buildings’ Four Highly-Qualified Board Nominees on the GOLD Proxy Card Today For a Fresh Perspective on
Operations, Amongst Other Areas – |
Stamford, CT— (May 7, 2015) – Land and Buildings,
an investment firm specializing in publicly traded real estate and real estate related securities, and a shareholder of MGM
Resorts International (NYSE: MGM) (“MGM” or the “Company”), today issued the following press release highlighting
what it sees as the urgent need for increased operational focus at MGM, as evidenced by the Company’s first quarter earnings
report issued on March 4, 2015:
MGM Resorts’ Disappointing Operating Results in
the First Quarter Underscore the Need for Change
MGM’s first quarter 2015 Las Vegas operating results,
in our view, were highly troubling and support the need for greater operational focus. In particular, during the first quarter:
- RevPAR at the Company’s wholly-owned Las Vegas
Strip properties rose 1%, falling short of management’s guidance of 2%-3% growth, an outlook that was given more than halfway
through the first quarter on February 17, 2015.
- EBITDA at the Company’s wholly-owned Las Vegas
Strip properties declined by 6%, or $21 million, from a year ago, despite revenues being flat year-over-year.
- Despite a 3% increase in revenues at the Company’s
“non-luxury” Las Vegas assetsi, EBITDA declined 2%, highlighting the failure of the Company to control expenses
and drive EBITDA higher, in our view.
In response to MGM’s first quarter performance, Deutsche Bank
noted the following, which in our view highlights the lack of focus on expense control at MGM:
“In 2014, MGM’s LV Strip same-store operations
had recovered to 86% of prior peak net revenue (2007), but only 66% of prior peak EBITDA…What we struggle with, however,
is the meaningful dichotomy between two Companies that are operating in the same labor / fixed cost environment, and showing such
stark expense control deltas. To demonstrate this point, we look at BYD …Unlike MGM, who has experienced expense growth
in every quarter since the 3Q13, BYD opex grew just once over that span, a 70 bps increase in the 2Q14…we believe it is
indicative of our view that MGM should at the very least have some low hanging fruit on the cost side in the Strip operations.”
The following chart from Deutsche Bank further highlights the
disconnect in MGM’s expense growth relative to one of its peer companies, Boyd Gaming Corporation (“Boyd”):
We are deeply concerned about what we view as MGM’s lack
of focus on expense control in Las Vegas, as evidenced by Chairman and CEO Jim Murren’s statement on the Company’s
earnings call on May 4, 2015 that, “we feel good about how we’re managing costs”. The Company appears, in our
view, to be more focused on new development rather than maximizing profits at irreplaceable assets they already own in Las Vegas
and improving its balance sheet by prioritizing the paying off of high interest rate debt.
L&B Board Nominees Would Provide Fresh Perspective
on Operations, Amongst Other Areas
We believe our director nominees, if elected, would help ensure
that the MGM Board and management honestly inquire into the Company’s operations with an eye toward reducing expenses. The
Land and Buildings’ nominees could seek to better align shareholders’ and management’s interests by including,
as part of evaluating the management team’s performance and annual bonus compensation, an assessment of operating metrics,
such as EBITDA margins and EBITDA flow-through, as opposed to the current annual incentive, which is tied solely to EBITDA.
Improving operating performance can have a significant impact
on MGM’s share price, as evidenced by the fact that a 200 basis point improvement in EBITDA margin could translate into $4
per share of stock price, or approximately 20% price appreciation. Land and Buildings' nominees will not only ensure that the Company
undertakes a clear-eyed assessment of its operations but also other areas that Land and Buildings has highlighted as opportunities,
including but not limited to: unlocking the value of MGM's real estate, selling non-core assets and deleveraging the balance sheet.
Land and Buildings’ slate of proposed nominees possesses track
records that speak for themselves:
| ü | Matthew J. Hart: Former President, COO and CFO, Hilton Hotels
Corporation (NYSE: HLT), and former CFO, Host Marriott Corporation |
| ü | Richard Kincaid: Former President and CEO of Equity Office
Properties Trust |
| ü | Jonathan Litt: Founder and CIO of Land and Buildings |
| ü | Marc Weisman: Former Partner of Weil Gotshal & Manges,
and former CFO of Oppenheimer & Co., Inc. |
Vote on the GOLD proxy card today.
##
About Land and Buildings:
Land and Buildings is a registered investment manager specializing
in publicly traded real estate and real estate related securities. Land and Buildings seeks to deliver attractive risk adjusted
returns by opportunistically investing in securities of global real estate and real estate related companies, leveraging its investment
professionals' deep experience, research expertise and industry relationships.
Investor Contact:
Scott Winter / Jonathan Salzberger
Innisfree M&A Incorporated
212-750-5833
Media Contact:
Elliot Sloane / Dan Zacchei
Sloane & Company
212-486-9500
Esloane@sloanepr.com or
Dzacchei@sloanepr.com
LAND & BUILDINGS CAPITAL GROWTH FUND, L.P., LAND & BUILDINGS
INVESTMENT MANAGEMENT, LLC AND JONATHAN LITT (COLLECTIVELY, "LAND & BUILDINGS") AND MATTHEW J. HART, RICHARD KINCAID
AND MARC A. WEISMAN (TOGETHER WITH LAND & BUILDINGS, THE "PARTICIPANTS") FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "SEC") ON APRIL 16, 2015 A DEFINITIVE PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY CARD TO BE USED IN CONNECTION
WITH THE PARTICIPANTS' SOLICITATION OF PROXIES FROM THE STOCKHOLDERS OF MGM RESORTS INTERNATIONAL (THE "COMPANY") FOR
USE AT THE COMPANY'S 2015 ANNUAL MEETING OF STOCKHOLDERS (THE "PROXY SOLICITATION"). ALL STOCKHOLDERS OF THE COMPANY
ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE PROXY SOLICITATION BECAUSE THEY CONTAIN IMPORTANT
INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS. THE DEFINITIVE PROXY STATEMENT AND AN ACCOMPANYING PROXY
CARD HAVE BEEN FURNISHED TO SOME OR ALL OF THE COMPANY'S STOCKHOLDERS AND ARE, ALONG WITH OTHER RELEVANT DOCUMENTS, AVAILABLE AT
NO CHARGE ON THE SEC'S WEBSITE AT HTTP://WWW.SEC.GOV/. IN ADDITION, INNISFREE M&A INCORPORATED, LAND & BUILDING'S PROXY
SOLICITOR, WILL PROVIDE COPIES OF THE DEFINITIVE PROXY STATEMENT AND ACCOMPANYING PROXY CARD WITHOUT CHARGE UPON REQUEST.
_____________________________
1 Defined as Circus,
Circus, Excalibur, Luxor, Monte Carlo, and New York New York.
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