Kerkorian buys MGM Mirage shares, stake now 42 percent

LOS ANGELES (Reuters) - Billionaire Kirk Kerkorian, the largest shareholder of MGM Mirage (MGM.N: Quote, Profile, Research), has acquired more shares of the casino operator, but his overall stake in the company has fallen, according to a securities filing on Monday.

Shares of the Las Vegas-based company rose about 9 percent to $8.36 on the New York Stock Exchange.

The purchase came on the heels of a $1 billion equity offering by MGM, which lowered the stake held by Kerkorian's Tracinda Corp to about 39 percent, according to Sanford Bernstein analyst Janet Brashear.

The new shares bring Tracinda's holdings to about 42 percent, which is still well below the 53.8 percent held by the Kerkorian-led investment company as of May 13.

The news came as JPMorgan upgraded the stock to "overweight" from "neutral." The brokerage said the improved liquidity position of the company following its stock and bond offerings should alleviate any bankruptcy-risk concerns for at least two years.

In a filing with the U.S. Securities and Exchange Commission, Kerkorian's Tracinda disclosed it had acquired an additional 14.3 million shares of the casino operator for $7 each.

MGM's lenders a week ago agreed to let the company raise up to $2.5 billion by selling new stock and bonds. Last week, MGM said it had completed a $1 billion public offering through the issuance of 143 million shares, which was more than double the number the company had originally telegraphed.

Brashear said there is some speculation that Kerkorian may have agreed to rein in his MGM holdings as part of an agreement with debtholders. "They probably don't want someone else in control of the company," she said.

Officials at MGM Mirage did not immediately return a request for comment.