MGM Stock – MGM Grand, Inc., an entertainment, hotel, and gaming compa…
MGM Grand, Inc., an entertainment, hotel, and gaming company, made the following news announcement:
LAS VEGAS, April 17 (2000) /PRNewswire/-MGM Grand, Inc.(NYSE: MGG) today announced that it has placed 46.5 million shares of its common stock at $26.50 per share with a limited number of financial institutions and Tracinda Corporation, its principal stockholder.The private placement raises $1.23 billion of new equity MGM Grand expects to utilize the proceeds in connection with its pending acquisition of Mirage Resorts, Incorporated (NYSE: MIR).
The article further stated that Tracinda Corporation’s interest would decline from 64.4% to 60% of the outstanding shares as a result of this placement.
a. MGM common stock has a $0.01 par value. Provide the journal entry that would be made by MGM to record the proceeds from this common stock issuance.
b. What is a private placement?
c. Why would Tracinda Corporation approve the reduction of its ownership?