MGM Resorts has declared that it will increase its stake in its joint-venture Macau-based division.
[dropcap]T[/dropcap]he US operator currently owns 51 per cent of MGM China – with which it splits custody with Grand Paradise Macau. GPM is itself controlled by MGM China CEO Pansy Ho – the daughter of gambling tycoon Stanley Ho.
But a new agreement will see MGM pay $325m (E289m) in order to up its share in its Asian subsidiary to 56 per cent. As an additional clause of the transaction, Ho is set to increase her share in MGM Resorts to 4.8 per cent.
commitment to the long-term growth of Macau as a premier international tourism destination – Jim Murren, MGM Chief Executive
MGM chief executive Jim Murren said the move demonstrated the company’s “commitment to the long-term growth of Macau as a premier international tourism destination.”
MGM launched the MGM Macau (pictured) in 2007. The company is scheduled to open its second, $3bn (E2.7bn) Macau resort – dubbed the MGM Cotai – at some point next year.
MGM’s recently-published financials showed that in the three months ending June 30, the company enjoyed its most profitable domestic quarter since 2008: with adjusted earnings in excess of $500m (E444m). But revenues at the MGM Macau continued to prove disappointing – down 19 per cent on the PCP to $452m (E401m). A loss in VIP revenue (of 33 per cent) was the primary culprit – with mass market losses being markedly less severe (just 3 per cent).
As of the quarter’s end, the MGM cash balance stood at just over $2.5bn (E2.2bn) – a position that its CFO Dan A’rrigo said would soon “allow us to achieve our goal of becoming investment grade.”