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Mandalay Resort Group – ‘PREM14A’ for 8/6/04

On:  Friday, 8/6/04, at 8:26pm ET   ·   As of:  8/9/04   ·   For:  8/6/04   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  950123-4-9403   ·   File #:  1-08570

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/09/04  Mandalay Resort Group             PREM14A¶    8/06/04    2:946K                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Materials                         HTML    965K 
 2: CORRESP   ¶ Comment-Response or Other Letter to the SEC         HTML      3K 

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

MANDALAY RESORT GROUP

Payment of Filing Fee (Check the appropriate box):

Common stock, par value $0.01 2/3 per share of Mandalay Resort Group (“Mandalay common stock”).

67,518,070 shares of Mandalay common stock and options to purchase 782,934 shares of Mandalay common stock.

The filing fee was determined by multiplying ..00012670 by the sum of: (x) $4,793,782,970 which is the product of 67,518,070 shares of Mandalay common stock and the merger consideration of $71.00 per share in cash in consideration for the cancellation of all outstanding Mandalay common stock and (y) $37,862,688, which is the product of outstanding options to purchase 782,934 shares of Mandalay common stock in consideration for cancellation of such options and $48.36, which is the amount equal to the excess of $71.00 over the weighted average exercise price of such outstanding options.

$4,831,645,658

$612,170

o     Fee paid previously with preliminary materials.

Notes:

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Dear Stockholder:

      We cordially invite you to attend our annual meeting of stockholders to be held at           , Las Vegas, Nevada, on           , 2004, at            A.M. Las Vegas time (doors will open            A.M. Las Vegas time).

      As you may recall, beginning on or about May 27, 2004, we mailed to our stockholders a proxy statement and notice of annual meeting for the annual meeting of stockholders originally scheduled to be held on July 6, 2004. On June 15, 2004, we entered into a merger agreement with MGM MIRAGE and a subsidiary of MGM MIRAGE providing for MGM MIRAGE’s acquisition of all the outstanding shares of our common stock for $71.00 per share in cash. Following the announcement of the merger, we decided to postpone the annual meeting of stockholders originally scheduled for July 6, 2004, and have now rescheduled the annual meeting of stockholders for                     , 2004 (the “annual meeting”). At the annual meeting, we will ask you to approve the merger agreement. We will also ask you to consider and vote on a number of regular annual meeting proposals, which we describe in the notice of annual meeting on the following page.

      Our Board of Directors has unanimously determined that the merger and the merger agreement are in the best interests of Mandalay and our stockholders. Accordingly, the Board has unanimously adopted the merger agreement and unanimously recommends that you vote FOR the approval of the merger agreement at the annual meeting.

      Your vote is important. We cannot consummate the merger unless holders of a majority of the outstanding shares of our common stock entitled to vote approve the merger agreement. Whether or not you plan to attend the annual meeting in person, please submit your proxy without delay. Voting by proxy will ensure that we can vote your shares at the annual meeting even if you are not there in person.

      We encourage you to read the accompanying revised proxy statement carefully because it explains the proposed merger, the merger agreement and other related matters. We have also enclosed our 2004 Annual Report, and you can obtain other information about us from documents that we have filed with the Securities and Exchange Commission.

      We are very excited about the MGM MIRAGE merger and we believe that the merger consideration represents an attractive price for your shares. Whether or not you plan to be present at the annual meeting, please vote by proxy as soon as you can after you have reviewed the enclosed materials. You may also attend the annual meeting and vote in person.

      This revised proxy statement is dated                     , 2004 and we are mailing it to stockholders beginning on or after                     , 2004.

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       We will hold the annual meeting of stockholders of Mandalay Resort Group (“Mandalay”) at           , Las Vegas, Nevada, on                     , 2004, at            A.M. Las Vegas time. Items of business at the meeting will be:

      Only stockholders who held shares of record as of the close of business on                     , 2004, are entitled to receive notice of and to vote at the meeting or any adjournment or postponement thereof. Whether or not you plan to attend the annual meeting in person, please submit your proxy as soon as possible. Voting by proxy will ensure that you are represented at the annual meeting even if you are not there in person. Please review the instructions on the proxy card.

      Whether or not you attend the meeting, you may revoke a proxy at any time before we vote it at the meeting. You may do so by executing and returning a proxy card dated later than the previous one or by submitting a written notice of proxy revocation to our Corporate Secretary before we take the vote at the meeting. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

Las Vegas, Nevada

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Additional Information

      Mandalay is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Mandalay files reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”).

      You may read and copy these reports, proxy statements and other information at the SEC’s Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website, located at http://www.sec.gov, that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC.

      If you have questions about the annual meeting or the merger with MGM MIRAGE after reading this revised proxy statement, or if you would like additional copies of this revised proxy statement or the proxy card, you should contact Mandalay Resort Group, 3950 Las Vegas Boulevard South, Las Vegas, Nevada 89119, Attention: Chief Financial Officer. Mandalay also makes available, free of charge, through its Internet website (www.mandalayresortgroup.com) its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and, if applicable, amendments to those reports, filed pursuant to Section 13 or 15(d) of the Exchange Act as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. You may also contact our proxy solicitors:

Georgeson Shareholder Communications Inc.

and

The Altman Group, Inc.

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SUMMARY

      This summary highlights selected information from this revised proxy statement about the proposed merger and our annual meeting and may not contain all of the information that is important to you as a Mandalay stockholder. Accordingly, we encourage you to read carefully this entire document and the other documents to which we refer you. References in this revised proxy statement to “Mandalay”, “we”, “our” and “us” mean, unless the context indicates otherwise, Mandalay Resort Group and its consolidated subsidiaries. These terms, as used in this revised proxy statement, do not include our unconsolidated joint ventures unless the context otherwise requires.

The Companies (page 15)

      Mandalay. Mandalay, a Nevada corporation, operates 12 wholly owned resorts in Nevada and Mississippi, as well as investments in four joint ventures with operating resorts in Nevada, Illinois and Michigan.

      MGM MIRAGE. MGM MIRAGE, a Delaware corporation, owns and operates 11 casino resorts located in Nevada, Mississippi and Michigan and has investments in two other casino resorts in Nevada and New Jersey.

The Annual Meeting (page 12)

      Background of Annual Meeting. On or about May 27, 2004, we commenced mailing to our stockholders a proxy statement and notice of annual meeting in connection with the annual meeting of stockholders, which was originally scheduled to be held on July 6, 2004. Following announcement of the merger, we issued a press release announcing the postponement of the annual meeting. Beginning on or about                     , 2004, we commenced mailing to our stockholders a notice of annual meeting, accompanied by this revised proxy statement, for the rescheduled annual meeting.

      Date, Time and Place. The annual meeting will be held on                     , 2004 at           , Las Vegas, Nevada, at            A.M. Las Vegas time to consider and vote upon proposals to approve the merger agreement; to elect three members of our board of directors for a three-year term or until the consummation of the merger, whichever occurs earlier; to ratify the appointment of Deloitte & Touche LLP as our independent auditors for 2004; and to act on other matters and transact other business as may properly come before the meeting and any adjournment or postponement of the meeting.

      Record Date and Voting Power. You are entitled to vote if you owned shares of our common stock at the close of business on                     , 2004, the record date for the annual meeting. You will have one vote for each share of our common stock you owned at the close of business on the record date. On the record date, there were            shares of our common stock entitled to be voted at the annual meeting.

Background of the Merger (pages 15 through 18)

      This section of the revised proxy statement contains a description of the process that we undertook with respect to our reaching a definitive merger agreement with MGM MIRAGE, and includes a discussion of our contacts and discussions with MGM MIRAGE that led to that agreement.

Purpose and Effect of the Merger (page 34)

      The principal purpose and effect of the merger is to effectuate the acquisition by MGM MIRAGE of all of our outstanding common stock and to exchange each share of Mandalay common stock that you hold for $71.00 in cash.

      Following the consummation of the merger, Mandalay will become a wholly owned subsidiary of MGM MIRAGE and Mandalay common stock will not be quoted on The New York Stock Exchange, which is referred to as the “NYSE”, or The Pacific Exchange and will no longer be publicly traded.

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Reasons for the Merger and the Recommendation of the Board of Directors (pages 18 through 20)

      Our board of directors has determined that the merger and the merger agreement are in the best interests of Mandalay and its stockholders, and recommends that you vote “FOR” the approval of the merger agreement. In making this determination, our board of directors considered a number of factors, including, among other things:

      In the course of its deliberations, our board of directors also considered a variety of risks and potential drawbacks relating to the merger, including, among other things:

Structure of the Merger (page 35)

      Subject to the terms and conditions of the merger agreement, MGM MIRAGE Acquisition Co. #61, a wholly owned subsidiary of MGM MIRAGE, would merge with and into Mandalay. As a result of the merger,

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Merger Consideration (page 35)

      If we consummate the merger, you would have the right to receive $71.00 in cash for each share of our common stock that you hold.

Stock Options and Restricted Stock (page 36)

      Mandalay stock options would be canceled immediately prior to the time of the merger, and holders would receive an amount equal to the excess, if any, of $71.00 over the per share exercise price for each share subject to the stock option, less any applicable withholding taxes and without interest. Each vested and unvested restricted share of our common stock would be canceled in exchange for the right to receive $71.00 in cash, less any applicable withholding taxes and without interest.

Conditions to the Merger (pages 43 through 45)

      Mandalay and MGM MIRAGE are not required to consummate the merger unless a number of conditions are satisfied or waived, including:

      We expect the merger to occur shortly after all of the conditions to the merger have been satisfied or waived as expeditiously as possible, and in any event on or before June 30, 2005.

Agreement to Obtain Clearance from Regulatory Authorities (pages 40 through 42)

      Subject to the terms and conditions of the merger agreement, Mandalay and MGM MIRAGE have agreed to use all reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law and regulations (including the HSR Act and applicable gaming laws) to consummate the merger.

      In addition, MGM MIRAGE has agreed to take any and all actions necessary in order to ensure that:

would preclude consummation of the merger by June 30, 2005.

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Regulatory Matters

      Under United States Federal antitrust law, the merger may not be consummated until the parties have given notifications and furnished requested information to the FTC and the Antitrust Division and the applicable waiting periods are terminated or have expired. MGM MIRAGE and Mandalay each filed notification and report forms with the FTC and the Antitrust Division on June 25, 2004. On July 26, 2004, MGM MIRAGE and Mandalay received from the FTC requests for additional information with respect to the proposed merger. As a result of such requests for additional information, the waiting period under United States Federal antitrust law will be extended until 11:59 P.M. eastern time on the 30th day after both MGM MIRAGE and Mandalay have substantially complied with the requests for additional information or such later time as is agreed among the parties and the FTC.

      As a result of the merger, MGM MIRAGE will own Mandalay’s gaming facilities in Nevada and Mississippi and will acquire Mandalay’s ownership interests in gaming facilities and developments in Nevada, Illinois and Michigan. Each of these gaming operations is subject to various licensing and other regulatory requirements administered by various governmental entities. Some of these laws and regulations require that the applicable regulatory authorities approve the merger. MGM MIRAGE and/or Mandalay will be required to file applications with the gaming authorities in Nevada, Mississippi, Illinois, New Jersey and/or Michigan in connection with the merger.

Termination of the Merger Agreement (page 46)

      Mandalay and MGM MIRAGE may mutually agree in writing to terminate the merger agreement at any time without consummating the merger, even after our stockholders approve it. In addition, either Mandalay or MGM MIRAGE may terminate the merger agreement prior to the consummation of the merger under certain specified circumstances, including if:

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Termination Fee (page 47)

      Mandalay is required to pay MGM MIRAGE a termination fee of $160 million if:

Interests of Certain Persons in the Merger (pages 31 through 34)

      Our executive officers and directors have interests in the merger that are different from, or in addition to, the interests of our stockholders, including the following:

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Opinion of Mandalay’s Financial Advisor (pages 20 through 24 and Appendix B)

      Merrill Lynch has delivered an opinion to our board of directors that, as of June 15, 2004 (the date the merger agreement was executed), and based upon and subject to the assumptions, conditions, limitations and other matters set forth in that opinion, the $71.00 in cash per share to be received by the holders of our common stock pursuant to the merger agreement was fair from a financial point of view to the holders of our common stock. We include the full text of Merrill Lynch’s written opinion in Appendix B to this revised proxy statement. We urge you to read Merrill Lynch’s opinion carefully and in its entirety.

Material Federal Income Tax Consequences (pages 24 through 26)

      The receipt of cash in the merger by holders of our common stock will be a taxable transaction for United States federal income tax purposes (and may also be a taxable transaction under applicable state, local, foreign and other tax laws). For federal income tax purposes, a holder of shares of our common stock generally will recognize gain or loss equal to the difference between (1) the amount of cash received in exchange for such shares and (2) the holder’s adjusted tax basis in such shares. Please refer to the section entitled “Material Federal Income Tax Consequences” of this revised proxy statement for a more detailed explanation of the material federal income tax consequences of the merger. We urge you to consult your own tax advisors to determine the particular tax consequences to you (including the application and effect of any state, local or foreign income and other tax laws) of the receipt of cash in exchange for our common stock.

Appraisal or Dissenters’ Rights (page 35)

      Under Nevada law there are no appraisal or dissenters’ rights in connection with the merger.

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THE MERGER

      The following questions and answers briefly address some commonly asked questions regarding the proposed merger and the annual meeting. These questions and answers may not address all questions that may be important to you as a Mandalay stockholder. Please refer to the more detailed information contained elsewhere in this revised proxy statement, the appendices to this revised proxy statement and the other documents we refer to in this revised proxy statement.

The Annual Meeting

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The Merger

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Georgeson Shareholder Communications Inc.

and

The Altman Group, Inc.

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THE ANNUAL MEETING OF STOCKHOLDERS

      We are furnishing this revised proxy statement to stockholders of Mandalay as part of the solicitation of proxies by the Mandalay Board for use at the annual meeting.

 C: 

Date, Time and Place

      Mandalay will hold the annual meeting at                      , Las Vegas, Nevada, at            A.M., Las Vegas time, on                     , 2004.

 C: 

Purpose of the Annual Meeting

      At the annual meeting, we will ask holders of Mandalay common stock to approve the merger agreement, elect three directors to serve on the Mandalay Board for three years or until the consummation of the merger, whichever occurs earlier, and ratify the appointment of Mandalay’s independent auditors. The Mandalay Board has adopted the merger agreement, has determined that the merger agreement and the merger are in the best interests of Mandalay and its stockholders, and recommends that Mandalay’s stockholders vote “FOR” the approval of the merger agreement. The Mandalay Board also recommends that Mandalay’s stockholders vote “FOR” the election of the three nominated directors and “FOR” the ratification of the appointment of Mandalay’s independent auditors.

 C: 

Record Date, Shares Entitled to Vote and Quorum

      Only holders of record of Mandalay common stock at the close of business on                     , 2004, the record date, are entitled to notice of, and to vote at, the annual meeting. On the record date,            shares of Mandalay common stock were issued and outstanding and held by approximately           holders of record. A quorum will be present at the annual meeting if the holders of a majority of the outstanding shares of Mandalay common stock entitled to vote on the record date are represented in person or by proxy. In the event that a quorum is not present at the annual meeting, it is expected that the meeting will be adjourned or postponed to solicit additional proxies. Every holder of Mandalay common stock is entitled to one vote for each share held of record on the record date.

 C: 

Vote Required

      In order to approve the merger agreement, holders of at least a majority of the outstanding shares of Mandalay common stock entitled to vote must vote in favor of approving the merger agreement. For the election of directors, the three nominees receiving the highest number of “FOR” votes cast will be elected as directors. Ratification of the appointment of Mandalay’s independent auditors requires that the number of shares cast “FOR” the proposal exceeds the number of shares cast “AGAINST” the proposal.

      If you withhold a vote or abstain from voting on the proposal relating to the approval of the merger agreement, it will have the same effect as a vote “AGAINST” the proposal because holders of a majority of the outstanding shares of Mandalay common stock entitled to vote must vote in favor of the proposal in order for it to be approved. For the election of directors, withholding a vote as to all or specific nominees, which is the equivalent of abstaining, will have no effect on the outcome, since an abstention is not a vote cast. For the ratification of Mandalay’s independent auditors, abstentions will have no effect on the outcome, since an abstention is not a vote cast.

      Shares of Mandalay common stock may be voted under certain circumstances if they are held in the name of a brokerage firm or nominee. Under rules currently in effect, brokerage firms and nominees that are members of the NYSE have the authority under the NYSE’s rules to vote their customers’ unvoted shares on certain “routine” matters if the customers have not furnished voting instructions within a specified period prior to the meeting. Under these rules, the election of directors and ratification of the appointment of Deloitte & Touche LLP as Mandalay’s independent auditors are considered to be “routine” matters. The approval of the merger agreement, however, is not considered a “routine” matter and hence brokerage firms and nominees will not be able to vote the shares of customers from whom they have not received voting instructions with regard to approval of the merger agreement. Shares of Mandalay common stock held directly in a stockholder’s name will not be counted as shares present for the purpose of establishing a quorum and will not be voted if the stockholder does not provide a proxy or attend the meeting and vote their shares.

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      “Broker non-votes” occur when a person holding shares through a bank or brokerage account does not provide instructions as to how his or her shares should be voted and the broker does not exercise discretion to vote those shares on a particular matter. Brokers may exercise discretion to vote shares as to which instructions are not given with respect to the election of directors and ratification of independent auditors, but brokers may not exercise discretion to vote shares as to which instructions are not given with respect to approval of the merger agreement. Broker non-votes will have no effect on the election of directors or the ratification of Mandalay’s independent auditors because broker non-votes will not be considered votes cast, but will be counted as shares present and entitled to be voted for the purposes of determining the presence of a quorum. With regard to the approval of the merger agreement, the shares represented by a broker non-vote will also be considered present at the annual meeting for the purposes of determining a quorum, but will have the same effect as a vote “AGAINST” the proposal because holders of a majority of the outstanding shares of Mandalay common stock entitled to vote must vote in favor of the proposal in order for it to be approved.

      A quorum of Mandalay shares must be present at the meeting in order for the meeting to be held. For purposes of determining the presence of a quorum, shares will be counted if they are present in person or by proxy. Shares present by proxy will be counted as present for purposes of determining the presence of a quorum even if the proxy does not have authority to vote on all matters.

Voting by Directors and Executive Officers

      At the close of business on the record date, the directors and executive officers of Mandalay and their affiliates owned and were entitled to vote shares of Mandalay common stock representing approximately           % of the shares of Mandalay common stock outstanding on that date. To Mandalay’s knowledge, these directors and executive officers intend to vote their shares “FOR” the approval of the merger agreement, “FOR” the election of the three nominated directors and “FOR” the ratification of the appointment of Mandalay’s independent auditors.

Voting of Proxies

      All shares represented by properly executed proxies received in time for the annual meeting will be voted at the annual meeting in the manner specified in the proxies. Properly executed proxies that do not contain voting instructions will be voted “FOR” the approval of the merger agreement, “FOR” the election of the three nominated directors, “FOR” the ratification of Mandalay’s independent auditors and will be deemed to grant discretion to the proxy holder on any other matter which may properly come before the annual meeting, including any adjournments, postponements or continuations of the meeting.

      The persons named as proxies by a stockholder may propose and vote for one or more adjournments of the annual meeting, including adjournments to permit further solicitation of proxies. Unless provided otherwise in the written authorization, no proxy voted against the proposal to approve the merger agreement will be voted in favor of any such adjournment or postponement.

      Mandalay does not expect that any matter other than the proposals to approve the merger agreement, elect directors and ratify the appointment of the independent auditors will be brought before the annual meeting. If, however, any other matter should properly come before the annual meeting, unless provided otherwise in the written authorization, the persons named as proxies will vote in accordance with their judgment as to matters that they believe to be in the best interests of the stockholders. A proxy in the accompanying form will give authority to Michael S. Ensign and Yvette E. Landau to vote on such matters at their discretion and they intend to do so in accordance with their best judgment on any such matter.

      Previously submitted proxies for the annual meeting of stockholders originally scheduled for July 6, 2004, which have not subsequently been revoked, will be voted for the election of directors and the ratification of the appointment of Deloitte & Touche LLP in the manner set forth in the previously submitted proxy. Mandalay stockholders who do not submit a new proxy or attend the annual meeting will not be able to vote on the approval of the merger agreement. This will have the same effect as a vote “AGAINST” the approval of the merger agreement because holders of a majority of the outstanding shares of Mandalay common stock entitled to vote must vote in favor of the proposal in order for it to be approved.

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Revocability of Proxies

      The grant of a proxy on the enclosed form of proxy does not preclude a stockholder from voting in person at the annual meeting. A stockholder may revoke a proxy at any time prior to its exercise by (a) giving written notice of the revocation to Mandalay’s Corporate Secretary, Yvette E. Landau, at 3950 Las Vegas Boulevard South, Las Vegas, Nevada 89119 or (b) submitting a properly signed proxy with a later date. Attendance at the annual meeting will not in and of itself constitute a revocation of the proxy. If you have instructed your broker or other nominee to vote your shares, you must follow the procedures provided by your broker or nominee to change those instructions.

Solicitation of Proxies

      Pursuant to the merger agreement, Mandalay and MGM MIRAGE will share equally the expenses of soliciting proxies in the form included with this revised proxy statement, including the cost of preparing and filing material in connection with the solicitation. In addition to the use of the mail, Mandalay’s directors, executive officers and employees may solicit proxies personally or by telephone. Mandalay has also hired Georgeson Shareholder Communications Inc. and The Altman Group, Inc. to assist in the solicitation of votes at an estimated cost of $[          ], plus their out-of-pocket expenses. Mandalay and MGM MIRAGE will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.

      You should not send your stock certificates with your proxy. A letter of transmittal with instructions for the surrender of Mandalay common stock certificates will be mailed to Mandalay’s stockholders promptly after the consummation of the merger.

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THE MERGER (PROPOSAL NO. 1)

The Companies

      Mandalay, a Nevada corporation, owns and operates 11 properties in Nevada: Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus Circus – Reno in Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass in Henderson. Mandalay also owns and operates Gold Strike, a hotel/ casino in Tunica County, Mississippi. Mandalay owns a 50 percent interest in Silver Legacy in Reno, and owns a 50 percent interest in and operates Monte Carlo in Las Vegas. In addition, Mandalay owns a 50 percent interest in and operates Grand Victoria, a riverboat in Elgin, Illinois, and owns a 53.5 percent interest in and operates MotorCity in Detroit, Michigan.

      Mandalay maintains its principal executive offices at 3950 Las Vegas Boulevard South, Las Vegas, Nevada 89119, telephone (702) 632-6700. For additional information with respect to Mandalay, see the documents specified under “Additional Information”.

      MGM MIRAGE, a Delaware corporation, owns and operates 11 casino resorts located in Nevada, Mississippi and Michigan and has investments in two other casino resorts in Nevada and New Jersey. Its portfolio of brands includes Bellagio, MGM Grand Las Vegas – The City of Entertainment, The Mirage, TI, New York – New York, Boardwalk Hotel and Casino and 50 percent of Monte Carlo, all located on the Las Vegas Strip; Whiskey Pete’s, Buffalo Bill’s, Primm Valley Resort and two golf courses at the California/ Nevada state line; the Shadow Creek golf course in North Las Vegas; Beau Rivage on the Mississippi Gulf Coast; and MGM Grand Detroit Casino in Detroit, Michigan. The Company is a 50 percent owner of Borgata, a destination casino resort at Renaissance Pointe in Atlantic City, New Jersey. Internationally, MGM MIRAGE also owns a 25 percent interest in Triangle Casino, a local casino in Bristol, United Kingdom.

      MGM MIRAGE maintains its principal executive offices at 3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109, telephone (702) 891-3333.

Background of the Merger

      Mandalay first learned of MGM MIRAGE’s interest in a possible acquisition of Mandalay during May 2004 when Mr. James J. Murren, President, Chief Financial Officer and Treasurer of MGM MIRAGE, raised the possibility of a combination of Mandalay and MGM MIRAGE with Mr. Glenn W. Schaeffer, President and Chief Financial Officer of Mandalay. Mr. Schaeffer informed Mr. Murren that any such possibility would need to be raised directly with Mr. Michael S. Ensign, Chairman and Chief Executive Officer of Mandalay. On May 25, 2004, Mr. Kirk Kerkorian, the majority stockholder and a director of MGM MIRAGE, telephoned Mr. Ensign and indicated to Mr. Ensign that MGM MIRAGE was interested in exploring an acquisition of Mandalay, and requested to meet with Mr. Ensign on June 1, 2004, when Mr. Kerkorian would be in Las Vegas, Nevada.

      On May 31, 2004, Mr. Schaeffer met with Mr. Murren and, on June 1, 2004, Mr. Ensign met with Mr. Kerkorian, and at each meeting the parties discussed the possibility of a cash acquisition of Mandalay by MGM MIRAGE. Mr. Ensign indicated to Mr. Kerkorian that he would discuss the matter with the Mandalay Board at a regularly scheduled Board meeting on June 2, 2004.

      On June 2, 2004, at a regularly scheduled meeting of the Mandalay Board, Mr. Ensign informed the Mandalay Board of his meeting with Mr. Kerkorian, and the Mandalay Board discussed the possibility of an acquisition of Mandalay by MGM MIRAGE. After discussion, the Mandalay Board authorized Mandalay senior management to continue discussions with MGM MIRAGE. Following the Board meeting, Mandalay engaged Merrill Lynch as its financial advisor with respect to a possible transaction with MGM MIRAGE.

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      Later on June 2, at the invitation of MGM MIRAGE, Mr. Schaeffer, Ms. Yvette E. Landau, Vice President, General Counsel and Secretary of Mandalay, Mr. Les Martin, Vice President, Chief Accounting Officer and Treasurer of Mandalay, and representatives of Merrill Lynch, visited Mr. Murren and other members of MGM MIRAGE management at MGM MIRAGE’s offices to discuss the process for proceeding with the parties’ consideration of a possible MGM MIRAGE acquisition of Mandalay. During the meeting, Mr. Schaeffer was asked to step out for two side meetings with Mr. J. Terrence Lanni, Chairman and Chief Executive Officer of MGM MIRAGE, and Mr. Murren. At the second side meeting, Mr. Lanni informed Mr. Schaeffer that MGM MIRAGE would be willing to acquire Mandalay at a price of $66.00 per share of Mandalay common stock in cash. Mr. Schaeffer informed Mr. Lanni that, although he had not conducted any financial analysis of such an offer and was not authorized to discuss price on behalf of Mandalay, in his view a price of $66.00 per share of Mandalay common stock undervalued Mandalay and was too low to continue discussions with MGM MIRAGE.

      Following the meeting, Mr. Kerkorian telephoned Mr. Ensign and informed Mr. Ensign that MGM MIRAGE would be willing to acquire Mandalay at a price of $67.00 per share of Mandalay common stock in cash. Later that day, Mr. Ensign telephoned Mr. Kerkorian and informed him that he would instruct his management team and advisors to commence an analysis of the MGM MIRAGE offer.

      On June 3, 2004, Mandalay retained Cravath, Swaine & Moore LLP as its legal advisor with respect to a possible transaction with MGM MIRAGE. After the close of the market on June 3, Mandalay released fiscal first quarter results, reporting net income of $87.3 million, or $1.30 per diluted share of Mandalay common stock, a significant increase from Mandalay’s fiscal first quarter results for the prior year. On the evening of June 3, MGM MIRAGE’s legal advisors provided to Mandalay a draft form of merger agreement.

      On June 4, 2004, the Mandalay stock price closed at $60.27 on the NYSE, an increase of $5.65, or an increase of 10.3%. During the afternoon of June 4, Mr. Kerkorian contacted Mr. Ensign by telephone to inform him that MGM MIRAGE was concerned by the rise in Mandalay’s stock price, and indicated that a letter from MGM MIRAGE to Mandalay would be forthcoming. Thereafter, Mandalay received a letter from MGM MIRAGE in which MGM MIRAGE offered to purchase all of the outstanding shares of Mandalay common stock at a price of $68.00 per share in cash and which stated that the offer contained in the letter would expire at 5:00 pm PST on June 8, 2004. Mr. Ensign convened a special telephonic meeting of the Mandalay Board and informed the Mandalay Board of the letter from MGM MIRAGE and its contents, and the Mandalay Board authorized Mandalay management to continue discussions. Later that evening, MGM MIRAGE publicly announced its $68.00 cash offer. Mandalay then publicly announced that it would consider the MGM MIRAGE offer and respond in due course.

      Over the weekend of June 5 and June 6, 2004, Mandalay and its financial and legal advisors analyzed MGM MIRAGE’s offer and, subsequently, Merrill Lynch contacted other potential acquirors of Mandalay. On the afternoon of June 7, Mandalay management conferred by telephone with its financial and legal advisors to discuss the offer and Merrill Lynch’s contacts with other potential acquirors. The Merrill Lynch representatives reviewed the financial aspects of the $68.00 offer price. After the meeting, Mr. Ensign contacted Mr. Kerkorian and informed him that he would not recommend to the Mandalay Board a sale of Mandalay at a price of $68.00 per share, and requested that MGM MIRAGE evaluate its ability to pay a higher price for Mandalay.

      On June 8, 2004, the Mandalay Board convened telephonically for a special meeting. The Mandalay Board discussed the MGM MIRAGE offer, and Mandalay’s financial advisors provided a review of the current business and economic environment, Mandalay’s recent operating and stock price performance, their preliminary analysis of the financial aspects of the MGM MIRAGE offer and their contacts with other potential acquirors. Mandalay’s legal advisors discussed with the directors their fiduciary duties under applicable law, and Mandalay’s management and legal advisors discussed the regulatory risks associated with a transaction with MGM MIRAGE. After the discussion, the Mandalay Board authorized management to continue discussions with MGM MIRAGE.

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      Following the meeting of the Mandalay Board, Mr. Ensign telephoned Mr. Kerkorian and again informed Mr. Kerkorian that MGM MIRAGE would need to offer a higher price for an acquisition of Mandalay. Later on June 8, MGM MIRAGE extended the expiration of its offer to 5:00 pm PST on June 11, 2004.

      On June 9 and June 10, 2004, the legal advisors to each of Mandalay and MGM MIRAGE engaged in contract negotiations and discussed the allocation of regulatory risk associated with the proposed transaction. Early on the morning of June 11, 2004, MGM MIRAGE provided to Mandalay a revised draft merger agreement which proposed a $100 million termination payment by MGM MIRAGE to Mandalay in the event MGM MIRAGE did not obtain the regulatory approvals needed to complete the acquisition of Mandalay by September 30, 2005. The draft merger agreement did not, however, obligate MGM MIRAGE to take actions necessary to obtain regulatory approvals. In addition, the draft contained extensive limitations on Mandalay’s ability to operate its business between signing the merger agreement and consummating the merger. In the view of Mandalay management, MGM MIRAGE’s proposal allocated a disproportionate share of the regulatory risk to Mandalay stockholders and did not provide sufficient assurance that the transaction would close.

      On the morning of June 11, 2004, Mr. Ensign attempted to reach Mr. Kerkorian by telephone to confirm that MGM MIRAGE did not wish to change the terms of its proposal, but did not reach Mr. Kerkorian. The Mandalay Board then convened for a special meeting. Mandalay’s legal advisors again discussed with the directors their fiduciary duties under applicable law, and Mandalay’s management and legal advisors presented MGM MIRAGE’s proposal (including the proposed allocation of regulatory risk among the parties) to the Mandalay Board. The Mandalay Board evaluated the regulatory risk associated with the merger and the allocation of regulatory risk proposed by MGM MIRAGE, and considered certain other provisions of MGM MIRAGE’s proposed merger agreement. After discussion, the Mandalay Board unanimously agreed to reject the MGM MIRAGE proposal on the basis of the proposed allocation of regulatory risk. Following the meeting, Mr. Ensign spoke with Mr. Kerkorian by telephone, and Mr. Kerkorian confirmed that there were no changes to MGM MIRAGE’s proposal. Mandalay then publicly announced the Mandalay Board’s rejection of the MGM MIRAGE offer.

      During the evening of June 11, Mr. Murren contacted Mr. Schaeffer and indicated that MGM MIRAGE would be willing to enter into an agreement under which MGM MIRAGE would assume all of the regulatory risk associated with the transaction. After discussion, Mr. Schaeffer and Mr. Murren agreed that the legal advisors to each of Mandalay and MGM MIRAGE should negotiate the terms of a draft merger agreement that, among other things, would provide for MGM MIRAGE’s assumption of the regulatory risk and reduce the limitations on Mandalay’s ability to operate its business between signing the merger agreement and consummating the merger, and the legal advisors did so through the evening of June 11 and the weekend of June 12 and June 13.

      On June 13, 2004, Mr. Schaeffer telephoned Mr. Murren and informed him that the Mandalay Board would consider the revised proposal by MGM MIRAGE, and requested a final offer price from MGM MIRAGE. Later that afternoon, Mr. Lanni met with Mr. Schaeffer and informed him that MGM MIRAGE would be willing to acquire Mandalay at a price of $71.00 per share of Mandalay common stock in cash.

      On the morning of June 14, 2004, Mandalay issued a press release stating that the revised terms of the proposed acquisition, including the $71.00 price offered by MGM MIRAGE, would be presented to the Mandalay Board on June 15, 2004. On June 14, 2004, and during the morning of June 15, 2004, Mandalay and MGM MIRAGE and their respective legal advisors finalized the terms of the draft merger agreement.

      On June 15, 2004, the Mandalay Board convened for a special meeting. Mandalay’s legal advisors again discussed with the directors their fiduciary duties under applicable law. Mr. Ensign reviewed for the Mandalay Board developments with respect to the proposed MGM MIRAGE transaction since June 11, 2004. Representatives of Merrill Lynch reviewed financial aspects of the proposed transaction, including a brief discussion of the absence of any offers from alternative acquirors. Merrill Lynch rendered its oral opinion, confirmed by a subsequent written opinion dated June 15, 2004, that, as of the date of the opinion and based upon and subject to the matters and various assumptions and limitations stated in the opinion, the $71.00 cash per share consideration to be received by holders of Mandalay common stock pursuant to the merger

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      After extensive deliberation and discussion, the Mandalay Board voted unanimously to approve the merger, the merger agreement and all related matters (including, among other things, the matters described under “— Interests of Certain Persons in the Merger”) and to recommend to Mandalay stockholders that they vote to approve the merger agreement. Such matters were also approved by a separate vote of the independent directors of Mandalay.

      On June 16, 2004, MGM MIRAGE and Mandalay issued a joint press release announcing the execution of the merger agreement.

Mandalay’s Reasons for the Merger — Recommendation of the Mandalay Board

      At a special meeting of the Mandalay Board on June 15, 2004, the Mandalay Board unanimously determined that the merger was in the best interests of Mandalay and its stockholders and unanimously adopted the merger agreement and the merger. Accordingly, the Mandalay Board recommends that Mandalay stockholders vote “FOR” approval of the merger agreement at the annual meeting.

      In reaching its decision to approve and adopt the merger agreement and the merger, and to recommend that Mandalay stockholders vote to approve the merger agreement, the Mandalay Board considered the following material factors:

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      After considering these factors, the Mandalay Board concluded that the $71.00 per share cash merger price was an attractive price for Mandalay stockholders in comparison to the values that Mandalay might reasonably achieve in the foreseeable future as a stand-alone, independent company. The Mandalay Board also considered potential drawbacks or risks relating to the merger, including:

      In addition, the Mandalay Board was aware of and considered the interests of executive officers and directors of Mandalay described under “— Interests of Certain Persons in the Merger”.

      The foregoing discussion addresses certain material information and factors considered by the Mandalay Board in its consideration of the merger, including factors that support the merger as well as those that may weigh against it. In view of the variety of factors and the quality and amount of information considered, the

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Opinion of Merrill Lynch

      Mandalay retained Merrill Lynch to act as its exclusive financial advisor in connection with the merger. On June 15, 2004, Merrill Lynch rendered its oral opinion to the Mandalay Board (subsequently confirmed by delivery of a written opinion dated June 15, 2004) that, as of such date and based upon and subject to the factors and assumptions set forth therein, the merger consideration was fair from a financial point of view to holders of Mandalay common stock.

      The full text of the Merrill Lynch opinion, which sets forth, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by Merrill Lynch, is included as Appendix B to this revised proxy statement and is incorporated herein by reference. Mandalay stockholders are urged to read such opinion in its entirety. The Merrill Lynch opinion was provided to the Mandalay Board for its information and addresses only the fairness of the merger consideration from a financial point of view to the holders of Mandalay common stock, and does not address any other aspect of the merger or constitute a recommendation to any stockholder of Mandalay as to how such stockholder should vote on the proposed merger at the annual meeting. Merrill Lynch’s opinion did not address the merits of the underlying decision by Mandalay to engage in the merger. This summary is qualified in its entirety by reference to the full text of such opinion.

      The merger consideration was determined through negotiations between Mandalay and MGM MIRAGE and was approved by the Mandalay Board. Merrill Lynch provided advice to Mandalay during the course of those negotiations.

      The summary set forth below does not purport to be a complete description of the analyses underlying the Merrill Lynch opinion or the presentations made by Merrill Lynch to the Mandalay Board. The preparation of a fairness opinion is a complex and analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. In arriving at its opinion, Merrill Lynch considered the results of all analyses and did not attribute any particular weight to any analysis or factor considered by it. Merrill Lynch made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all such analyses. While each factor set forth below is separate, Merrill Lynch believes that its analyses must be considered as a whole and that selecting portions of its analyses or of the summary set forth below, without considering all analyses, would create an incomplete view of the process underlying its opinion.

      In performing its analyses, numerous assumptions were made with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Merrill Lynch or Mandalay. Any estimates contained in the analyses performed by Merrill Lynch are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested analyses. Additionally, estimates of the value of business or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, such analyses and estimates are inherently subject to substantial uncertainty. In addition, as described above, the Merrill Lynch opinion was among several factors taken into consideration by the Mandalay Board in making its determination to approve and adopt the merger agreement and the merger. Consequently, the analyses performed by Merrill Lynch described below should not be viewed as determinative of the decision of the Mandalay Board or Mandalay’s management with respect to the fairness of the merger consideration.

      In arriving at its opinion, Merrill Lynch, among other things: (i) reviewed publicly available business and financial information relating to Mandalay that Merrill Lynch deemed to be relevant; (ii) reviewed

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      In preparing its opinion, Merrill Lynch assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly available, and Merrill Lynch did not assume any responsibility for independently verifying such information or undertake an independent evaluation or appraisal of any of the assets or liabilities of Mandalay nor was Merrill Lynch furnished with any such evaluation or appraisal, nor did Merrill Lynch evaluate the solvency or fair value of Mandalay under any state or federal laws relating to bankruptcy, insolvency or similar matters. In addition, Merrill Lynch did not assume any obligation to conduct any physical inspection of the properties or facilities of Mandalay. With respect to the financial forecast information furnished to or discussed with Merrill Lynch by Mandalay, Merrill Lynch assumed that this information was reasonably prepared and reflected the best currently available estimates and judgment of Mandalay’s management as to the expected future financial performance of Mandalay. Merrill Lynch also assumed that the final form of the merger agreement is substantially similar to the last draft reviewed by Merrill Lynch.

      The Merrill Lynch opinion is necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of the Merrill Lynch opinion.

      The following is a summary of the material analyses presented by Merrill Lynch to the Mandalay Board on June 15, 2004, in connection with the rendering of the Merrill Lynch opinion.

      Historical Stock Price Analysis. Merrill Lynch analyzed the intraday high and intraday low stock prices of Mandalay on the NYSE for the 52 weeks ending June 4, 2004, which were $62.20 and $29.81, respectively. The current price as of June 4, 2004 of $60.27 was 96.9% of the 52-week high of $62.20.

      Comparable Public Companies Analysis. Merrill Lynch reviewed and compared certain financial information for Mandalay to corresponding financial information for the following: (a) large-capitalization publicly traded companies in the gaming industry (“Large Cap Gaming”) and (b) small to medium capitalization publicly traded companies in the gaming industry (“Small/ Mid Cap Gaming”):

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      Although none of the selected companies is directly comparable to Mandalay, the companies included were chosen because they are publicly traded companies with operations that for purposes of Merrill Lynch’s analysis may be considered similar to certain operations of Mandalay.

      Merrill Lynch calculated and compared various financial multiples and ratios based on publicly available financial data through June 14, 2004 obtained from SEC filings and Wall Street equity research estimates. Merrill Lynch also reviewed certain income statement and balance sheet data for the selected companies obtained from SEC filings. The multiples and ratios of Mandalay were calculated using the closing price of Mandalay common stock on the NYSE on June 4, 2004 (the last full trading session prior to the public announcement of the MGM MIRAGE offer). The multiples and ratios for each of the selected companies were based on the most recent publicly available information. Estimates for 2004 and 2005 refer to the fiscal year of each company most closely associated with the 2004 and 2005 calendar years. For example, Mandalay 2004 and 2005 estimates refer to estimates of Mandalay’s fiscal years 2005 and 2006. With respect to the selected companies, Merrill Lynch calculated:

      The following table presents the results of this analysis:

      Merrill Lynch selected a range of multiples of enterprise value to estimated 2004 EBITDA of 8.0x to 9.5x based on the comparable public companies analysis which implied an equity value per share for Mandalay of $48.70 and $65.10, respectively, as compared to Mandalay’s multiple of enterprise value to estimated 2004 EBITDA of 9.0x (which includes MotorCity’s EBITDA on a proportionate basis) and the $71.00 merger price.

      None of the selected companies used in the above analysis is identical to Mandalay. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of the selected companies and other factors that could affect the public trading value of Mandalay and the selected companies. Mathematical analysis (such as determining the mean or median) of the financial ratios of the selected companies is not in itself a meaningful method of using comparable company data.

      Comparable Transaction Analysis. Merrill Lynch analyzed certain information relating to fourteen mergers and acquisitions announced in the last six years representing acquisitions of gaming companies or

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      Merrill Lynch selected a range of multiples of aggregate transaction value to implied last 12-months EBITDA of 9.5x to 11.25x based on the comparable transaction analysis, which implied an equity value per share for Mandalay of $54.10 and $69.60, respectively, as compared to the multiple of last 12-months EBITDA implied for Mandalay by the merger consideration of 11.4x (which includes MotorCity’s EBITDA on a proportionate basis) and the $71.00 merger price.

      None of the companies or selected transactions used in the comparable transaction analysis is identical to Mandalay, MGM MIRAGE or the merger. Accordingly, an analysis of the resulting multiples of the selected transactions necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and the selected transactions and other factors that may have affected the selected transactions and/or affect the merger.

      Discounted Cash Flow Analysis. Merrill Lynch calculated a range of discounted cash flow values of Mandalay using projections prepared by Mandalay’s management. This analysis was based on the sum of (i) the present value of projected, standalone, after-tax, unlevered free cash flows of Mandalay for fiscal periods from the second quarter of 2004 through fiscal year 2008 and (ii) the present value of the terminal value, based on Mandalay’s estimated 2008 EBITDA. Merrill Lynch calculated a range of values for Mandalay by utilizing discount rates ranging from 7.5% to 9.5% and terminal value multiples of estimated 2008 EBITDA ranging from 8.0x to 9.0x. This analysis resulted in illustrative values of Mandalay on an equity value per share basis set forth below:

      Merrill Lynch noted that if present values were calculated as of January 31, 2005, including the effect of the suspension of dividends (as provided for in the merger agreement), the implied equity value per share for

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      Net Asset Value Analysis. Merrill Lynch calculated, using net asset valuation methodology, a range of implied per share values for Mandalay using the estimated 2004 EBITDA for certain properties and unconsolidated joint ventures. Merrill Lynch derived a range of high and low implied per share pre-tax values for Mandalay of $62.54 and $52.82, respectively, and high and low implied per share after-tax values for Mandalay of $47.52 and $39.85, respectively. These implied per share values represent blended high and low estimated 2004 EBITDA multiples for Mandalay of 8.4x and 9.3x on a pre-tax basis, respectively, and 7.2x and 7.9x on an after-tax basis, respectively.

      Pursuant to a letter agreement dated June 11, 2004 between Mandalay and Merrill Lynch, Mandalay agreed to pay Merrill Lynch customary fees, contingent and payable upon consummation of the sale transaction. Additionally, Mandalay has agreed to reimburse Merrill Lynch for certain reasonable out-of-pocket expenses, including certain reasonable fees and disbursements of its legal counsel. Mandalay has also agreed to indemnify Merrill Lynch and certain related persons for certain liabilities related to or arising out of its engagement, including liabilities under the federal securities laws.

      Mandalay retained Merrill Lynch based upon Merrill Lynch’s experience and expertise. Merrill Lynch is an internationally recognized investment banking and advisory firm. Merrill Lynch, as part of its investment banking business, is continuously engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.

      Merrill Lynch has, in the past, provided financial advisory and financing services to Mandalay and MGM MIRAGE and may continue to do so and has received, and may receive, fees for rendering such services. In addition, in the ordinary course of its business, Merrill Lynch may actively trade the equity and other securities of Mandalay, as well as securities of MGM MIRAGE, for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.

Material Federal Income Tax Consequences

      The following summary describes the material U.S. federal income tax consequences of the merger to Mandalay stockholders. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), applicable existing and proposed U.S. Treasury Regulations promulgated thereunder, judicial authority and administrative pronouncements, all as in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect. This summary addresses only shares of Mandalay common stock that are held as capital assets within the meaning of section 1221 of the Code and does not address all aspects of U.S. federal income taxation that may be relevant to a particular Mandalay stockholder in light of that Mandalay stockholder’s personal investment circumstances, or those Mandalay stockholders subject to special treatment under the U.S. federal income tax laws (for example, life insurance companies, tax-exempt organizations, financial institutions, expatriates, dealers in securities or commodities or traders in securities who elect to apply mark-to-market method of accounting). In addition, this discussion does not address the aspects of U.S. federal income taxation that may be relevant to Mandalay stockholders who hold shares of Mandalay common stock as part of a hedging, “straddle”, conversion or other integrated transaction, or Mandalay stockholders who acquired their shares of Mandalay common stock through the exercise of director or employee stock options or other compensation arrangements. In addition, this discussion does not address any aspect of foreign, state or local taxation or estate and gift taxation that may be applicable to a Mandalay stockholder.

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      For purposes of this discussion, a “U.S. holder” means

      The treatment of a partner in a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) that holds Mandalay common stock will generally depend on the status of the partner and upon the activities of the partnership. Partners of partnerships holding Mandalay common stock should consult their tax advisors.

      STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER.

      The receipt of the merger consideration in the merger will be a taxable transaction for U.S. federal income tax purposes (and also may be a taxable transaction under applicable state, local and other income tax laws). In general, for U.S. federal income tax purposes, a U.S. holder of Mandalay common stock will recognize gain or loss equal to the difference between such stockholder’s adjusted tax basis in Mandalay common stock converted in the merger, and the amount of cash received. Gain or loss will be calculated separately for each block of shares (i.e., shares acquired at the same cost in a single transaction) converted in the merger. The gain or loss will generally be capital gain or loss, and will generally be long-term capital gain or loss if, at the effective time of the merger, the shares of Mandalay common stock converted were held for more than one year. In the case of U.S. holders who are individuals, long-term capital gain is currently eligible for reduced rates of federal income tax. There are limitations on the deductibility of capital losses.

      The following discussion applies to Mandalay stockholders who are “non-U.S. holders”. A “non-U.S. holder” is a person or entity that is not a U.S. holder.

      If a non-U.S. holder sells or otherwise disposes of Mandalay common stock in the merger in a transaction that is treated as a sale or exchange for U.S. federal income tax purposes, such stockholder generally will not be subject to U.S. federal income tax on any gain realized on the disposition of Mandalay common stock in the merger unless:

      An individual who is present in the United States for 183 days or more in the taxable year in which the Mandalay common stock is disposed of in the merger should consult his or her own tax advisor regarding the U.S. federal income tax consequences of the merger.

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      Under the U.S. federal income tax backup withholding rules, unless an exemption applies, MGM MIRAGE is required to and will withhold 28% of all payments to which a Mandalay stockholder or other payee is entitled in the merger, unless the Mandalay stockholder or other payee provides its taxpayer identification number (“TIN”) (social security number, in the case of an individual, or employer identification number, in the case of other stockholders), and certifies under penalties of perjury that the TIN provided is correct (or that such stockholder or other payee is awaiting a TIN) and that stockholder is not subject to backup withholding. Each Mandalay stockholder and, if applicable, each other payee, should complete and sign the substitute Form W-9 that will be part of the letter of transmittal to be returned to the payment agent in order to provide the information and certification necessary to avoid backup withholding, unless an applicable exemption exists and is otherwise proved in a manner satisfactory to the payment agent. The exemptions provide that certain Mandalay stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding requirements. In order for a foreign individual to qualify as an exempt recipient, however, he or she must submit a signed statement (such as a Certificate of Foreign Status on Form W-8) attesting to his or her exempt status. Any amounts withheld will be allowed as a credit against the holder’s U.S. federal income tax liability for that year. If withholding results in an overpayment of taxes, a refund may be obtained by filing a tax return with the Internal Revenue Service.

THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. MANDALAY STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF ANY CHANGES IN U.S. FEDERAL OR OTHER APPLICABLE TAX LAWS.

Governmental and Regulatory Matters

      Under the HSR Act and the rules and regulations promulgated thereunder, the merger may not be consummated until the parties have given notifications and furnished requested information to the FTC and the Antitrust Division and the applicable waiting periods are terminated or have expired.

      MGM MIRAGE and Mandalay each filed notification and report forms with the FTC and the Antitrust Division on June 25, 2004. On July 26, 2004, MGM MIRAGE and Mandalay received from the FTC requests for additional information with respect to the merger. As a result of such requests for additional information, the waiting period under the HSR Act will be extended until 11:59 P.M. EST on the 30th day after both MGM MIRAGE and Mandalay have substantially complied with the requests for additional information or such later time as is agreed among the parties and the FTC.

      At any time before or after completion of the merger, the FTC or any state attorneys general could take action under the antitrust laws as any of them deem necessary or desirable in the public interest, including seeking to enjoin the completion of the merger, to rescind the merger or to seek divestiture of particular assets of MGM MIRAGE or Mandalay. Under certain circumstances, private parties could also take action under the antitrust laws. There can be no assurance that a challenge to the merger will not be made or, if such a challenge is made, that the parties will prevail. For further information regarding the obligations of Mandalay and MGM MIRAGE with regards to governmental and regulatory matters, see “The Merger Agreement — Agreement to Obtain Clearance from Regulatory Authorities”.

      The following is an abbreviated description of the various gaming regulatory requirements applicable to the merger. For a more detailed description of gaming regulations generally, please see “Item 1. Business —

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      Nevada Gaming Regulations. The ownership and operation of casino gaming facilities in Nevada are subject to the Nevada Gaming Control Act and the regulations of the Nevada Gaming Commission (collectively, the “Nevada Act”) and various local ordinances and regulations. Mandalay’s and MGM MIRAGE’s respective gaming operations are subject to the licensing and regulatory control of the Nevada Gaming Commission, the Nevada State Gaming Control Board and applicable local liquor and gaming authorities (collectively, the “Nevada Gaming Authorities”).

      The Nevada Act provides that the acquisition of control of a registered publicly traded corporation such as Mandalay must be approved by the Nevada Gaming Commission. On July 16, 2004, MGM MIRAGE filed applications seeking the necessary approvals with the Nevada State Gaming Control Board and the Nevada Gaming Commission. Mandalay has also filed applications for registration as an intermediary company, various amendments to its existing Order of Registration and an amendment to its existing approval for a continuous or delayed public offering in connection with the merger. The Nevada State Gaming Control Board reviews and investigates applications for approval and makes recommendations on those applications to the Nevada Gaming Commission for final action. MGM MIRAGE is currently registered as a publicly traded corporation and has been found suitable to own the shares of its subsidiaries that have licensed gaming facilities in Nevada. Accordingly, MGM MIRAGE has informed Mandalay that it does not expect significant delays in obtaining necessary approvals. However, there can be no assurance that these approvals will be granted or will be granted on a timely basis or without burdensome conditions. Furthermore, any such approval, if granted, does not constitute a finding, recommendation or approval by the Nevada State Gaming Control Board or the Nevada Gaming Commission as to the merits of the merger. Any representation to the contrary is unlawful.

      In seeking approval of the merger, MGM MIRAGE must satisfy the Nevada Gaming Commission as to a variety of stringent standards. The Nevada State Gaming Control Board and the Nevada Gaming Commission will consider all relevant material facts in determining whether to grant this approval, and may consider not only the effects of the merger but also any other facts that are deemed relevant. Such facts may include, among others, (1) the business history of the applicant, including its record of financial stability, integrity and success of its operations, as well as its current business activities, (2) the adequacy of the proposed financing and (3) whether the merger will create a significant risk that MGM MIRAGE, Mandalay or their subsidiaries will not satisfy their financial obligations as they become due or satisfy all financial and regulatory requirements imposed by the Nevada Act.

      The Nevada State Gaming Control Board and the Nevada Gaming Commission will also consider whether the merger is in the best interests of the State of Nevada under the multiple licensing criteria in the Nevada Act. Among other factors set forth in such multiple licensing criteria, they may consider whether the merger would create a monopoly, and what the result of the merger will be in respect of the market share of MGM MIRAGE compared to similarly situated competitors on a statewide, countywide and other geographical basis in the following categories: total number of slot machines, total number of games, total number of tables, gross revenue, percentage tax, casino entertainment tax (now known as live entertainment tax), number of rooms available for the public, number of employees hired and total payroll.

      In addition, certain officers, directors and key employees of Mandalay and its licensed subsidiaries at the time of completion of the merger who will be actively and directly involved in Mandalay’s and its subsidiaries’ gaming activities may also be required to be found suitable or licensed by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing, a finding of suitability or registration for any cause that they deem reasonable. A finding of suitability is comparable to licensing, and both require the submission of detailed personal and financial information followed by a thorough investigation. MGM Mirage has informed Mandalay that all individuals required to file applications for findings of suitability and/or licensing after the consummation of the merger as officers, directors and key employees of Mandalay and its licensed subsidiaries have filed applications with the Nevada Gaming Authorities. There can be no assurance that these approvals will be granted or will be granted on a timely basis.

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      Michigan Gaming Regulations. The ownership and operation of casino gaming facilities in Michigan are subject to the Michigan Gaming Control and Revenue Act (the “Michigan Act”) and the rules promulgated thereunder (the “Michigan Rules”) by the Michigan Gaming Control Board (the “Michigan Board”). Mandalay’s and MGM MIRAGE’s respective gaming interests in Michigan casino licensees Detroit Entertainment, L.L.C. and MGM Grand Detroit LLC are subject to the licensing and regulatory control of the Michigan Board.

      The Michigan Rules require Michigan Board approval of the transfer of certain ownership interests in the holder of a casino license. A person acquiring more than a five percent interest in a publicly traded corporation that directly or indirectly holds a casino license must apply to the Michigan Board for a finding of suitability within 45 days after acquiring the interest. The Michigan Rules also require notification to the Michigan Board in connection with certain public offerings of debt or equity securities and approval by the Michigan Board of certain debt transactions. MGM MIRAGE is obligated to comply in a timely manner with the Michigan Rules to the extent applicable.

      The Michigan Act provides that an entity holding more than a ten percent ownership interest in one Michigan casino licensee is ineligible for licensure if it holds more than a ten percent ownership interest in a second Michigan casino licensee. Upon consummation of the merger, MGM MIRAGE will have an indirect ownership interest of more than ten percent in two Michigan casino licensees. As a consequence, MGM MIRAGE will need to dispose of its interest in one of the two casinos in accordance with the Michigan Act and Michigan Rules. The Michigan Act and Michigan Rules do not specifically address the requirements for, or the timing of, a disposition under these circumstances, and it remains uncertain and there can be no assurance as to what position the Michigan Board will take in this situation.

      Certain officers, directors and key employees of a casino licensee may also be required to be found suitable by or to receive an occupational license from the Michigan Board prior to assuming their duties. In such event, the Michigan Board may require the submission of detailed personal and financial information followed by a thorough investigation. There can be no assurance that such individuals will be found suitable or receive occupational licenses on a timely basis or at all.

      Mississippi Gaming Regulations. The ownership and operation of casino gaming facilities in Mississippi are subject to the Mississippi Gaming Control Act and various local regulations. Mandalay’s gaming operations at Gold Strike, in Tunica, Mississippi, are subject to the licensing and regulatory control of the Mississippi Gaming Commission.

      Regulations of the Mississippi Gaming Commission provide that the acquisition of control of a registered publicly traded corporation such as Mandalay or a corporate licensee such as Circus Circus Mississippi, Inc. must be approved by the Mississippi Gaming Commission. MGM MIRAGE has informed Mandalay that it intends to file applications for the necessary approvals with the Mississippi Gaming Commission in a timely manner. There can be no assurance that the approvals will be granted or will be granted on a timely basis. Furthermore, any such approval, if granted, does not constitute a finding, recommendation or approval by the Mississippi Gaming Commission as to the merits of the merger. Any representation to the contrary is unlawful.

      In seeking approval to acquire control of Mandalay, MGM MIRAGE must satisfy the Mississippi Gaming Commission as to a variety of stringent standards. The Mississippi Gaming Commission will consider all relevant material facts in determining whether to grant the approval, and may consider not only the effects of the merger but also any other facts that it deems relevant. Such facts may include, among others, (1) the business history of the applicant, including its record of financial stability, integrity and success of its operations, as well as its current business activities, and (2) whether the merger will create a significant risk that MGM MIRAGE, Mandalay or their subsidiaries will not satisfy their financial obligations as they

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      The Mississippi Gaming Commission must approve MGM MIRAGE, Tracinda Corporation and Mr. Kerkorian as controlling stockholders of Mandalay. MGM MIRAGE has informed Mandalay that it intends to file a Letter of Application seeking an approval in a timely manner. Following receipt of the necessary approvals of the Mississippi Gaming Commission and completion of the merger, Mandalay will be registered by the Mississippi Gaming Commission as an intermediary company of MGM MIRAGE if Mandalay ceases to hold publicly traded debt.

      Certain officers, directors and key employees of Mandalay prior to the merger, or of MGM MIRAGE after the merger, who will be actively and directly involved in Mandalay’s gaming activities may also be required to be found suitable or licensed by the Mississippi Gaming Commission. MGM MIRAGE has informed Mandalay that it intends to make any new applications for findings of suitability as may be required, and will also request the transfer or extension to the new organization of any existing findings of suitability, in each case in a timely manner. The Mississippi Gaming Commission may deny an application for licensing or registration for any cause that it deems reasonable. A finding of suitability is comparable to licensing, and both require the submission of detailed personal and financial information followed by a thorough investigation.

      If MGM MIRAGE assumes Mandalay’s existing debt upon the merger, then any pledges, negative pledges or restrictions on the transfer of the equity securities of MGM MIRAGE’s licensed or registered subsidiaries associated with all Mandalay debt assumed by MGM MIRAGE, and any pledges of the assets of or guarantees by MGM MIRAGE’s licensed subsidiaries associated with Mandalay’s publicly traded debt assumed by MGM MIRAGE, shall be ineffective unless approved in advance by the Mississippi Gaming Commission. Likewise, any pledges, negative pledges or restrictions on the transfer of the equity securities of Mandalay or Circus Circus Mississippi, Inc. associated with existing MGM MIRAGE bank debt shall be ineffective unless approved in advance by the Mississippi Gaming Commission. MGM MIRAGE has informed Mandalay that it intends to file in a timely manner the necessary application required for such an approval.

      Illinois Gaming Regulation. The Illinois Riverboat Gambling Act (“Illinois Act”) requires the owner of a riverboat gaming operation to hold an owner’s license issued by the Illinois Gaming Board. The Illinois Gaming Board also requires that a “Key Person” of an owner licensee submit a Personal Disclosure or Business Entity Form and be investigated and approved by the Illinois Gaming Board. The Illinois Gaming Board shall certify for each applicant for or holder of an owner’s license each position, individual or Business Entity that is to be approved by the Illinois Board and maintain suitability as a Key Person.

      Based upon its findings from an investigation into the character, reputation, experience, associations, business probity and financial integrity of a Key Person, the Illinois Gaming Board may enter an order upon the licensee to require economic disassociation of a Key Person. Each licensee is required to provide a means for the economic disassociation of a Key Person in the event such disassociation is required.

      In deciding whether to approve direct or indirect ownership or control of an owner’s license, the Illinois Gaming Board shall consider the impact of any economic concentration of the ownership or control. No direct or indirect ownership or control may be approved which will result in undue economic concentration of the ownership of a riverboat gambling operation in Illinois. Undue economic concentration occurs when a person or entity would have actual or potential domination of riverboat gambling in Illinois sufficient to:

      The Illinois Gaming Board considers a variety of criteria in determining whether the approval of the issuance, transfer or holding of a license will create undue economic concentration.

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      An ownership interest in the holder of an owner’s license, or in a business entity that has an interest in the holder of an owner’s license may be transferred only with the prior approval of the Illinois Gaming Board. The person or entity applying for transfer of the ownership interest must complete an Owner’s License Acquisition Form and Personal Disclosure Form and Business Entity forms as required. The Illinois Gaming Board will conduct an investigation to determine the suitability of the person or entity seeking the transfer.

      Applicants for and holders of an owner’s license are required to obtain prior Illinois Gaming Board approval for, among other things, changes in Key Persons and changes in equity and debt capitalization of the entity. Further, an owner licensee or its parent company must submit, and in some instances obtain prior approval from the Illinois Gaming Board for, certain financing transactions.

      A subsidiary of Mandalay owns a 50 percent interest in the entity that is the holder of the owner’s license in connection with the Grand Victoria. Therefore, the merger of Mandalay and MGM MIRAGE is subject to the approval of the Illinois Gaming Board. MGM MIRAGE has informed Mandalay that it intends to file in a timely manner a Business Entity Application to be considered a Key Person with respect to the possession of the owner’s license for the Grand Victoria Casino in Elgin, Illinois. In addition, MGM MIRAGE has informed Mandalay that two officers of MGM MIRAGE will file in a timely manner Personal Disclosure Form 1 in order to be considered Key Persons in Illinois. MGM MIRAGE has also informed Mandalay that it intends to file in a timely manner an Owner’s License Acquisition Form, in respect to which the Illinois Gaming Board may approve the transfer of the owner’s license from Mandalay to MGM MIRAGE. There can be no assurances that such approval will be granted on a timely basis or at all. Furthermore, any such approval, if made, does not constitute a finding, recommendation or approval by the Illinois Gaming Board as to the merits of the merger. Any representation to the contrary is unlawful.

      New Jersey Gaming Regulation. The ownership and operation of hotel-casino facilities and gaming activities in Atlantic City, New Jersey are subject to extensive state regulation.

      MGM MIRAGE must file with the New Jersey Casino Control Commission (the “New Jersey Commission”) and the New Jersey Division of Gaming Enforcement (the “New Jersey Division”) financial projections that address the financing of the merger at least 45 days prior to the annual meeting. MGM MIRAGE has informed Mandalay that it intends to file such financial projections in a timely manner. A hearing may need to be held before the New Jersey Commission if the New Jersey Commission’s or New Jersey Division’s review of the projections raise any concerns regarding the continuing financial stability, integrity and responsibility of MGM MIRAGE as a result of the merger. If the New Jersey Commission finds that MGM MIRAGE will not continue to possess financial stability, integrity and responsibility as a result of the financing of the merger, the qualification of MGM MIRAGE as a holding company could be revoked and it would no longer be able to have an indirect ownership interest in a New Jersey casino licensee.

      MGM MIRAGE must notify the New Jersey Commission and New Jersey Division of any new debt or equity issued in order to finance the merger and provide them with the related documentation, including lists of the holders or lenders, and may have to petition the New Jersey Commission for waiver of the security holder requirement subsequent to the incurrence of the debt or issuance of the equity securities. If any necessary waivers are not granted, the holder will either have to be found qualified by the New Jersey Commission or divest itself of its interest. There can be no assurance that the New Jersey Commission will find MGM MIRAGE to continue to possess financial stability, integrity and responsibility or that any necessary waivers will be granted. Furthermore, any such finding, if made, does not constitute a finding, recommendation or approval by the New Jersey Commission and New Jersey Division as to the merits of the merger. Any representation to the contrary is unlawful.

      Subject to the terms and conditions of the merger agreement, Mandalay and MGM MIRAGE have agreed to use all reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law and regulations to consummate the merger.

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Interests of Certain Persons in the Merger

      In considering the recommendation of Mandalay’s Board with respect to the merger agreement, you should be aware that Mandalay executive officers and directors have interests in the merger that are different from, or in addition to, those of Mandalay stockholders generally. Mandalay’s Board was aware of these interests and considered them, among other matters, in reaching its decision to approve and adopt the merger agreement and the merger and to recommend that Mandalay stockholders vote in favor of the merger agreement. Certain modifications to Mandalay’s existing bonus and benefit programs were negotiated in connection with the merger and agreed to by MGM MIRAGE.

      All stock options held by executive officers and directors of Mandalay, whether vested or unvested, will be canceled at the time of the merger in exchange for a cash payment of $71.00, less the applicable option per share exercise price for each share of Mandalay common stock which is subject to such stock option, less any applicable withholding taxes and without interest. The Mandalay Board amended the Mandalay stock option plans to provide for the vesting of all outstanding stock options and the conversion of the stock options into the right to receive cash as described above, in each case upon consummation of the merger.

      At the record date for the meeting, the directors and executive officers of Mandalay held the following stock options, including both vested and unvested options.

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      Since January 31, 2004, executive officers also have received grants of shares of restricted Mandalay common stock as part of Mandalay’s incentive compensation program. Restricted stock generally vests over time subject to the continued employment of the executive officer. In addition, on July 17, 2003, certain directors received as part of their compensation for serving as a director shares of restricted Mandalay common stock. Pursuant to the merger agreement, all outstanding shares of restricted Mandalay common stock, whether vested or unvested, will be canceled at the time of the merger in exchange for the right to receive a cash payment of $71.00 per share of restricted Mandalay common stock, less any applicable withholding taxes and without interest.

      As of the record date, directors and executive officers of Mandalay held the following vested and unvested shares of Mandalay restricted stock: