Posted on: August 22, 2022, 01:34h.
Last updated on: August 22, 2022, 01:54h.
Ahead of Macau’s gaming license retendering process, MGM China is funneling $594 million into MGM Grand Paradise to shore up that unit.
As part of that transaction, Pansy Ho, co-chairperson at MGM China, signed a 10-year contract valued at $8 million annually to remain a managing director of the gaming entity — a role she’s held since 2005. MGM China, which operates two Macau integrated resorts, is injecting MGM Grand Paradise with additional capital. The goal is to come into compliance with new gaming laws in the special administrative region (SAR). Those require casino companies to reach a certain level of capitalization in advance of receiving new licenses.
The Macau Government published the Revised Gaming Law on June 22, 2022, and the Revised Tender Regulation on July 5, 2022, respectively. Upon the forthcoming expiry of the Subconcession Further Extension Contract, the Company intends that MGM Grand Paradise will tender for a new gaming concession in Macau,” according to a regulatory filing issued by MGM China. “MGM Grand Paradise is required to comply with, among others, a minimum capital requirement of MOP5 billion.”
Other US-based operators previously loaned Macau units capital. In July, Las Vegas Sands (NYSE:LVS) loaned Sands China $1 billion. The month prior, Wynn Resorts (NASDAQ:WYNN) announced it is loaning its Wynn Macau arm $500 million.
Pansy Ho/MGM History
Under Macau’s new gaming laws, it’s required that an operator’s managing direct is a Macau permanent resident and holds at least 15% of the capital in the concessionaire — boxes checked by Ho.
Ho, the eldest daughter of Macau casino patriarch Stanley Ho, became a significant MGM shareholder in 2016. That’s when the Las Vegas-based company boosted its stake in its China unit to 56%. At that time, she controlled 22.5% of MGM China. She’s since dramatically whittled her stake in the US-based company, but remains one of MGM China’s largest shareholders.
“Upon completion of the Share Subscription and the Transfer, each of the Company, the Managing Director and MGM Resorts International will hold 84.6%, 15% and 0.4% of the issued share capital and voting rights of MGM Grand Paradise, respectively,” according to the filing.
With an estimated net worth of $3.1 billion, Ho, 60, is one of the richest women in Hong Kong. She’s also a major investor in SJM Holdings — her late father’s casino company.
MGM Taking it Slow in Macau
MGM Resorts International (NYSE:MGM) owns about 56% of the China business. While that’s a potentially lucrative stake in a normal operating environment, the world’s largest casino operator has been in anything but normal conditions since the dawn of the coronavirus era in early 2020.
As such, while MGM’s US operations are thriving, the company is taking more of a wait-and-see approach when it comes to large-scale investments at its two Macau venues.
The operator could be increasingly active in the Asia-Pacific region in the coming years. That’s if it wins approval for a casino-resort in Osaka, Japan, and if it gains entry into Thailand.