MGM China, the Chinese arm of U.S. gambling giant MGM Resorts International, announced in a filing on Sunday that it will inject capital into a subsidiary to qualify it to bid for a new Macau casino license. A total of 4.8 billion patacas ($594 million) will be placed into the MGM Grand Paradise unit.
The move is in response to a revised gaming law released by Macau’s legislature earlier this year, which establishes a casino needs a minimum capital requirement of 5 billion patacas, and the managing director of the concessionaire must be a Macau permanent resident holding at least 15% of its capital. MGM China further said that if the company is awarded the new concession, co-chairperson Pansy Ho will fill that role.
MGM Cotai, in Macau
MGM Grand Paradise will issue 4.07 million Class A shares to the company at an aggregate subscription price of 4.07 billion patacas, MGM China said in the filing, and issue and transfer another 730,000 Class B shares to Ho, reports Reuters. After the completion of the deal, MGM China and Ho’s holdings in MGM Grand Paradise will increase to 84.6% and 15% respectively, while MGM Resort International’s stake will drop to 0.4% from 10%.
Ho is the daughter of late casino tycoon Stanley Ho and will earn $8 million a year, reports Bloomberg. She’ll also be entitled to incentive payments of up to $95 million over the license term, based on MGM Grand Paradise’s earnings.
The announcement comes after reports that Macau’s 41 casino operators posted half-year losses of $2 billion, and total gaming revenue came in at $3.3 billion. Analysts are warning that gaming revenue, which accounts for 80% of government tax revenue, could fall further even as the city reopens its border with mainland city Zhuhai.
Despite the current struggles and hurdles, operators in Macau are now gearing up to bid for new licenses ahead of a September 14 deadline. Operating rights are set to expire at the end of the year so the tenders, which require a minimum guarantee of MOP10 million ($1.2 million), are crucial to casino operators’ operations.
Macao has tightened its gaming law and cracked down on lucrative VIP gambling, which is forcing operators to turn their focus to mass-market gaming and foreign gamblers, a move that might see full recovery not come until 2024, Moody’s Investors Service has said. The city is also pushing operators to expand nongaming entertainment options.
Original article: https://www.yogonet.com/international/news/2022/08/22/63930-macau-mgm-china-to-inject–594m-in-grand-paradise-subsidiary-to-retender-for-casino-license
