LAS VEGAS (AP) — Casino operator MGM Resorts International said Wednesday that it will hold a majority stake in a Chinese joint venture after its planned initial public offering.
MGM Resorts, in which billionaire Kirk Kerkorian is a major investor, said it reached deals with partner Pansy Ho that will give it 51 percent ownership and management control of MGM China Holdings Ltd. once it goes public on the Hong Kong Stock Exchange.
Ho will have a 29 percent stake and public shareholders will have 20 percent ownership. Ho will give the underwriters an option to buy up to 3 percent of MGM China’s shares to cover excess demand, effectively lowering her holdings in the company.
MGM China will become owner of the MGM Grand Paradise S.A., the Macau company that owns the MGM Macau resort and casino and the related gaming sub–concession.
Macau has continued to be a source of strength for casino operators with properties there, with a recent Macau government report indicating that gambling revenue there climbed 48 percent in March when compared with a year ago.
In a restructuring of their relationship, Ho has agreed to buy $300 million convertible senior notes issued by MGM Resorts on terms similar to the casino operator’s existing convertible senior notes due 2015.
MGM Resorts will receive proceeds from the notes sale but not from the planned IPO. Proceeds from the IPO will go to an entity controlled by Ho, which she will use to help fund the notes purchase.
The deals still need to be approved by the Hong Kong Stock Exchange.