MGM's Director Meister Affirms Responsible Reaction to Cyber Incident
A hedge fund manager and board member at MGM Resorts International, Keith Meister, claims the company reacted "rationally" to a cyberattack in September. He also mentions that the subsequent stock slump seems to be an overreaction.
In an interview with CNBC's David Faber at the 13D Monitor Active-Passive Investor Summit, Meister highlighted MGM as a well-managed firm responding quickly to the attack. As the chairman of MGM's Audit Committee, he mentioned that his firm Corvex Management is one of the institution's largest shareholders.
Meister remarked: "MGM is a really well-managed company that reacted very quickly to a horrible event. MGM responded quickly and very rationally. They did exactly what you would've expected."
Background on MGM Cyberattack
On or about September 9, MGM realized its systems had been infiltrated by the Scattered Spider hacking group. At the Las Vegas Strip and regional casino hotels, electronic room keys stopped working, slot machines became inoperable, and customer and employee data became at risk. Scattered Spider held off making a ransomware demand for a few days.
MGM did not pay the ransom nor revealed the ransom amount. The company announced last week the attack would cut EBITDAR by $100 million in Q3. Additionally, it stated incurring one-time costs of at least $10 million due to the event. Meister noted that MGM would have considered paying if it was the right business decision.
According to Meister: "It's our job to be good fiduciaries, so if the right business answer was to pay the ransom, I don't think we would've taken a moral position. It was nice and easier that we were on the right side of morality."
The manager said MGM had to rebuild its cybersecurity and technology systems regardless of whether it paid the ransom, potentially making the decision not to pay simpler.
Meister: MGM Stock Will Recover
MGM shares have plummeted due to the attack. However, the loss is expected to be relatively confined to Q3, as analysts and the company believe the majority of the financial consequences are tied to that quarter. The operator had been expected to generate $1.1 billion in property-level EBITDAR before the ransomware incident, which means while $100 million isn't insignificant, it's not as substantial as some might imagine.
Despite potentially "talking his book" by being a shareholder, Meister remains optimistic about MGM stock making a recovery.
Meister stated: "MGM was a plus or minus $50 stock before this happened, so the stock's gone down about 35% because of this awful event. I promise you this: the effect this has on our future cash flows is significantly less than 37%."
He also mentioned that the $100 million impact theoretically translates to a 20-cent to 25-cent loss per share, making the overall stock price decrease more severe than the financial hit.
Read also:
- The CDU is pushing for additional medical study positions in Homburg.
- US director Baker wins Palme d'Or at Cannes, while Iranian filmmaker Rasoulof receives Jury Prize.
- German enthusiast creates gigantic Harry Potter figure
- Lautern coach Alonso alters his lineup five times, with Ache left out.
Source: www.casino.org
