Dec
21
MGM Grand Cotai
Filed Under Macau, Cotai, MGM & Pansy Ho, MGM Cotai | 2 Comments
The incredible MGM Grand Macau has only been open for a few days and I’m already looking ahead to the opening of MGM’s Cotai resort. Since that project hasnt even been approved by the government yet, I am obviously jumping the gun a bit. But I can’t help myself, so here’s what MGM has said over the past few days about Cotai:
“In Macau, the MGM Grand Paradise partnership is in the process of negotiating with the government on a second site in Cotai. Separately, DW (Dubai World) owns land in Macau … which may present a location of a third Read more
May
22
MGM in play
Filed Under Macau, Macao, Cotai, Wall Street, MGM & Pansy Ho, MGM Cotai | Leave a Comment
What about Macau and Cotai?
Kirk Kerkorian’ Tracinda announed its intention to buy MGM’s Bellagio and City Center and also seek strategic alternatives for some or all of its MGM stock (he is the majority shareholder with approximately 55% ownership). So it would seem like MGM Mirage now appears to be in play.
MGM is Pansy Ho’s joint venture partner in Macau, with one hotel casino opening soon on the Macau Peninsula and plans to open a second hotel casino on their Cotai land sometime in the future.
Its too early to tell, but based on Tracinda’s announcement, it looks like one real outcome is that MGM Mirage goes through a leveraged buy-out (LBO), with either Tracinda or Kerkorian taking the company private or with a group of private equity firms taking the company private (with or without Bellagio and City Center) in a similar fashion to Harrah’s LBO.
For those not familiar with LBO’s, the acquisition is paid for by raising alot of debt on the target company’s balance sheet to pay for the acquisition. The new owners are usually interested in stable cash flows, and in many cases the new company is so burdened with paying interest that not alot of flexibility is left to reinvest in the company. So the newly LBO’s company could sell off higher risk, capital intensive projects that could garner a very high price and use the proceeds to repay some of the LBO debt. (*more below*)
MGM’s Macau and Cotai joint venture interest fits this high risk, capital intensive profile, so the question of whether or not MGM eventually sells its interest in Macau should be asked.
Who could be the buyer if MGM Macau is up for sale? Remember Richard Branson showed a real interest in Macau. Would the Donald want to be in Macau despite his twice bankrupt casino company’s history. Or could it be one of the newly minted billionaires emerging from China.
Another interesting question is whether or not one of the other Macau companyies, such as PBL, makes a run at trying to buy MGM Mirage since PBL has shown interest in being in Las Vegas. Also ask yourself why in the world is Las Vegas Sands public? Adelson own the vast majority of the stock and with the big casinos like Harrah’s, Station, and now maybe MGM, it is becoming clear you no longer need to be a public company in the gaming industry.
Leave your thoughts below.
Feb
28
Pansy passes Nevada regulators
Filed Under Macao, Cotai, MGM & Pansy Ho, MGM Cotai | Leave a Comment
One more hurdle in Nevada, then on to A.C.
After two years of research, Nevada regulators found Stanley Ho’s daughter, Pansy, as a suitable partner for MGM-Mirage.
Pansy: “For almost all of the 40-some years of my life, I have been trying to find an open forum to find and to express that I believe I have the capabilities to be an independent person and also to obtain independent success. I think the MGM opportunity will give me the chance to prove that further.” (*more below*)
And its a good thing Stanley was not the one in front of regulators.
Nevada Gaming Board Member: “There are volumes of controversy surrounding Dr. Stanley Ho, both historic and present. From my perspective, he operates in an environment that is less transparent than I am comfortable with.”
The decision must still be confirmed by the Nevada Gaming Commission, however, which is expected to meet in a month.
Pansy Ho and MGM are building a casino resort in Macau that should open in 2007 and are also in the planning stages of a Cotai casino.
Feb
14
MGM announces Cotai project
Filed Under Macau, Cotai, MGM & Pansy Ho, MGM Cotai | Leave a Comment
But Pansy still hasn’t passed muster with US regulators.
MGM Mirage announced it’s 50/50 joint venture with Stanley Ho’s daughter, Pansey Ho, will begin planning its second resort casino in Macau. The new casino will be located in a “prime identified spot in Cotai”. Plans for the new Cotai casino could be submitted by the end of the year. MGM’s first Macau casino project, the USD $1.1 billion MGM Grand Macau casino, should open in the fourth quarter of 2007. (**more below the ads**)
This is all fine and dandy for MGM, but their partnership with Pansy Ho has still not been approved by US regulators. If Nevada regulators are concerned that Pansy’s father (who has been accused at times of ties with organized crime) could be involved in the partnership, then MGM’s Macau aspirations could be in jeopardy. MGM would be forced to choose between Vegas or Macau, and since this is a Vegas centric company, the company would probably sell of its Macau joint venture interest. The silver lining for MGM in a scenario like this is the value they could receive from the casino and its concession license. Let’s not forget Wynn sold only a concession license for US $900 million last year. On the other hand, if a jurisdiction like New Jersey has problems with Pansy, then MGM could always just sell of its interest in the Borgata and move forward in Macau.