MGM China Holdings has announced it will invest 4.8 billion patacas (US$594 million) in its MGM Grand Paradise unit to enhance its bid for a new gaming license in Macau.
Under the amended gaming law approved by the Macau legislature earlier this year, casino operators must have at least 5 billion patacas to do business in the Chinese territory, up from 200 million, and have a managing director who is a permanent Macau resident holding at least 15 percent of the concessionaire’s capital. MGM China, the Chinese arm of U.S.-based MGM Resorts International, has named co-chair Pansy Ho to fill that role.
As reported by the Reuters news agency, MGM Grand Paradise will issue 4.07 million Class A shares to the company at an aggregate subscription price of 4.07 billion patacas and issue and transfer another 730,000 Class B shares to Ho.
On completion of the deal, MGM China and Ho’s holdings in MGM Grand Paradise will increase to 84.6 percent and 15 percent respectively, while MGM Resort International’s stake will drop to 0.4 percent from 10 percent.
According to GGRAsia, Pansy Ho will remain managing director of MGM Grand Paradise SA for at least another 10 years provided the operator wins a new concession. MGM China will pay Ho US$8 million per year for the role, plus incentive payments on a sliding scale, depending on the company’s adjusted EBITDA earnings each year, to a maximum of US$95 million over the 10-year concession period.
In an August 21 filing, MGM China said, “Upon the successful outcome of the tender, additional duties and obligations will be imposed on Ms. Pansy Ho pursuant to the delegation of authority to her as managing director from the MGM Grand Paradise’s board of directors.
“It is conditionally agreed that Ms. Pansy Ho will serve as the managing director of MGM Grand Paradise for the same term as the concession term in consideration of the remuneration and incentive payments set out in the Services Agreement entered into between Ms. Pansy Ho and MGM Grand Paradise.”
The company said it expects the new gaming concessions will be announced in November.
