Posted May 21, 2015 4:08 pm by Comments

A few days ago, Sanford C. Bernstein Hong Kong Ltd’s Vitaly Umansky said at the ongoing Global Gaming Expo (G2E) Asia 2015 conference that several of the current Macau casino operators could become buy outs targets for Chinese investors (see: Analyst: Macau Casinos Possible Chinese Buy Out Targets (GGRAsia)), but GGRAsia has just reported that William Scott, who has served as executive vice president of corporate strategy and special counsel at MGM Resorts International (NYSE: MGM) since July 2010, has shot down any notion of selling down their 51% stake in Macau casino operator MGM China Holdings Ltd (HKG: 2282; OTCMKTS: MCHVF; MCHVY):

“We consider all ideas. But some ideas are not good ideas. And selling down the interest we have in Macau…I think the reverse would be true. MGM [Resorts] would like to increase its stake in MGM Macau [MGM China]. We’d like to make broader investments in MGM Macau [sic].”

GGRAsia has pointed out that MGM Resorts is under pressure from some activist institutional investors to increase shareholder value.

Scott, who was also involved in the MGM China Holdings IPO, also commented:

“It was a carefully constructed transaction. In 2009, MGM was levered 11-plus times. And the banks were putting a lot of pressure on us, our shareholders were putting a lot of pressure on us – the economic situation was terrible – and so it was natural to try and raise cash. And the initial conceptions of the IPO were that both partners would sell down in a secondary offering… So that was what I was sent over here to do [at the time]: get an IPO done, that resulted in a cash bolus, because candidly, we needed it and our banks wanted it. Once we got the extension of our bank credit lines in 2010, that need became less compelling… The question became ‘What’s best for the stakeholders?’ The question I was asked this morning was ‘Is MGM committed to this market?’ Yes, we are abundantly committed to this market. We’re spending US$3 billion on a resort next door [on Cotai].”

To read the whole article, Selling MGM China stake would be bad idea: MGM Resorts exec, go to the website of GGRAsia. In addition, check out our Macau Casino stock list page.

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