|By Steve Green, Las Vegas
SunMcClatchy-Tribune Regional News
May 16, 2011--MGM Resorts International of Las Vegas confirmed Monday night its joint venture in China hopes to raise up to $1.5 billion in an initial public stock offering on the Hong Kong Stock Exchange.
MGM China Holdings Ltd. is marketing 760 million shares for a 20 percent stake in the Chinese casino operator at a price ranging from U.S. $1.59 to U.S. $1.97, MGM Resorts said in a notice to investors. The public notice kicked off the official marketing process for the shares.
After the IPO, MGM Resorts International would hold 51 percent of the Chinese company and its partner Pansy Ho would hold 29 percent.
The net proceeds of the offering will be paid to Ho in exchange for her reduced ownership stake. Ho then plans to buy some $300 million in principal amount of MGM Resorts' 4.25 percent convertible senior notes due 2015.
"It will result in us controlling one of the finest -- and certainly the fastest-growing assets -- in our portfolio post-IPO when we own 51 percent of MGM China. It also strengthens our bond with Pansy Ho, which we like, and we're doing more with her in China and as part of this deal she's investing a significant amount of her money into MGM Resorts," MGM Resorts International Chairman and CEO Jim Murren said of the deal during the company's May 4 conference call with analysts.
In information presented to investors Monday, MGM Resorts said the joint venture's MGM Macau hotel and casino is well positioned as Macau is already the world's largest gaming market and is "fed by a sizeable, under-penetrated population that is rapidly experiencing a substantial wealth increase."
In its first quarter report, MGM Resorts said MGM Macau had a record quarter with operating income of $126 million -- up 158 percent from the year-ago quarter.
As of December, the 587-room MGM Macau had, in terms of revenue, about an 11.4 percent market share among the 33 casinos at the time in Macau, the company said.
The property has about 1,000 slot machines and more than 425 gaming tables.
MGM China is looking for growth opportunities and has applied to the Macau government for permission to lease a parcel in the Cotai district for another resort.
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Copyright (c) 2011, Las Vegas Sun
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