MGM China investing $594m in MGM Grand Paradise
In preparation for the re-tendering of gaming licenses in Macau, casino operator MGM China Ltd is strengthening its holdings by injecting $594 million into the subsidiary company MGM Grand Paradise.
According to a court filing lodged by MGM China: “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 Sub-concession Further Extension Contract, the Company intends that MGM Grand Paradise will tender for a new gaming concession in Macau (the “Tender”). MGM Grand Paradise is required to comply with, among others, a minimum capital requirement of MOP5 billion.”
Following the deal, Pansy Ho, co-chairperson of MGM China, agreed to a 10-year deal for $8 million per year to continue serving as managing director of the gaming company, a position she has held since 2005.
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The latest gaming laws in Macau stipulate that an operator’s managing director must be a permanent resident of Macau and must hold a minimum of 15% of the equity in the concessionaire. Ho satisfies both of these requirements.
“Upon the successful outcome of the Tender, additional duties and obligations will be imposed on Ms. Pansy Ho pursuant to the delegation of authority to her as Managing Director from the MGM Grand Paradise’s board of directors. It is conditionally agreed that Ms. Pansy Ho will serve as the Managing Director of MGM Grand Paradise for the same term as the Concession Term in consideration of the remuneration and incentive payments set out in the Services Agreement entered into between Ms. Pansy Ho and MGM Grand Paradise,” the service agreement read.
“The Board is pleased to announce that on August 21, 2022, MGM Grand Paradise and Ms. Pansy Ho as the Managing Director entered into the Services Agreement, pursuant to which Ms. Pansy Ho will serve as the Managing Director of MGM Grand Paradise for the same term as the Concession Term in consideration of the remuneration and incentive payments set out in the Services Agreement.”
MGM China, which already owns and manages two other integrated resorts in Macau, is increasing its stake in MGM Grand Paradise by investing extra funds. The objective is to bring gaming operations in the special administrative zone into conformity with the newly enacted laws (SAR). In order to qualify for a new license, casino operations must first demonstrate that they have attained a particular amount of capital base.
MGM Resorts International owns approximately 56% of the China business. That is a highly valuable holding in a standard operating setting; however, the circumstances that the casino operator has been working under since the beginning of the coronavirus period in early 2020 have been anything but typical.
As a consequence of this, MGM’s operations in the United States are booming, but the organization is adopting more of a cautious approach strategy when it relates to making large-scale expenditures at its two Macau casinos.
It’s possible that over the next few years, the operator may ramp up its presence in the Asia-Pacific region. That is assuming that it will be granted permission to open casino resorts in Thailand and Japan.
MGM China, Sands China, Wynn Macau, Melco Resorts, Galaxy Entertainment, and SJM Holdings are the six companies that currently hold concessions in Macau. Their applications to keep their licenses will be reviewed by panel members, Li Wai Nong, Adriano Ho, Marina Helena de Senna Fernandes, and Cheong Weng Chon.