Hotel Online 
News for the Hospitality Executive




 
Malaysia-based Genting Company Buys 3.2 percent of MGM Mirage

By Howard Stutz, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Jun. 11, 2009--Malaysia-based Genting, an entertainment and gaming company, spent $100 million to purchase 3.2 percent, or roughly 14.3 million shares, of MGM Mirage.

The company, which is building a multibillion-dollar resort and casino complex in Singapore's Sentosa Island region, also purchased $100 million in MGM Mirage's corporate bonds.

Genting confirmed the transactions in filings with the Malaysian stock exchange.

"We are constantly looking to broaden our portfolio of strategic investments and strengthen partnerships around the world," Justin Leong, who oversees strategic investments and corporate affairs for Genting, told the Financial Times.

MGM Mirage spokesman Alan Feldman confirmed Genting's purchase Wednesday. MGM Mirage was not required to make disclosures about Genting with the federal Securities and Exchange Commission nor with Nevada gaming regulators because the acquisitions were below required reporting levels.

Bill Lerner, a principal in Union Gaming Group, speculated that Genting, which has $2.5 billion in cash through two publicly traded companies, was looking to park money in MGM Mirage.

"Genting's strategy is to expand into new markets, inside and outside of Asia," Lerner said. "They are definitely interested in Las Vegas and Macau."

Lerner said Genting's purchase of an equity stake in MGM Mirage was suggestive of a potential long-term relationship.

"It may simply be cash management," he said.

Genting's Singapore project involves six hotels, including a Hard Rock Hotel, casino, aquarium, retail and restaurants, and a Universal Studios theme park. The development, which is expected to open next year, will compete with the $5 billion Marina Bay Sands, which is being built by Las Vegas Sands Corp.

MGM Mirage completed a $2.6 billion corporate restructuring effort, in which it put 164.7 million new shares of company stock on the market through the New York Stock Exchange and issued new long-term senior secured notes.

The stock transactions left MGM Mirage's founder and majority stockholder Kirk Kerkorian with 39 percent of the company, down from his previous stake of almost 54 percent.

Edward Ong, the Malaysia-based gaming analyst for Macquarie Securities, said in a research note that he didn't think the stock purchase by Genting was indicative of a move to take over MGM Mirage.

"We do not believe that (Kerkorian) is ready to completely sell his company," Ong told investors. "This is a minority stake, and below the reporting threshold, hence Genting did not need to disclose its purchase."

Speculation in Asia centered on Genting's reported interest in acquiring MGM Mirage's 50 percent stake in the MGM Grand Macau.

The casino company may be forced by New Jersey gaming regulators to divest from any business relationship with its Macau joint venture partner, Hong Kong businesswoman Pansy Ho, the daughter of controversial billionaire Stanley Ho.

If the New Jersey Casino Control Commission agrees with the recommendation of the state's Division of Gaming Enforcement, MGM Mirage might be forced to part with either its stake in the MGM Grand Macau or its 50 percent ownership of the Borgata in Atlantic City. A hearing is expected to be held on the recommendation this year.

Shares of MGM Mirage closed at $7.06 Wednesday, down 9 cents or 1.26 percent.

-----

To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

Copyright (c) 2009, Las Vegas Review-Journal

Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. GENTING, MGM, LVS, NYX, PSO,




To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.