MGM China says it has completed a capital restructuring exercise required by the Macau government to comply with the city’s new gaming law and tender requirements.
Completion of the capital restructuring, which follows MGM China being provisionally awarded a new 10-year gaming concession from 1 January 2023, specifically addresses a stipulation that management of concessionaires shall be delegated to a Managing Director who “shall be a permanent resident of the Macau SAR and shall hold at least 15% of the capital stock of the concessionaire,” according to the gaming law.
As part of the complex arrangement, MGM China recently entered into Contribution and Share Subscription Agreement that has seen its Co-Chairperson and Managing Director, Pansy Ho, named 15% shareholder and Managing Director of the company that holds its Macau gaming concession, MGM Grand Paradise.
MGM China has also injected MOP$4.8 billion (US$594 million) into MGM Grand Paradise in order to meet a requirement under Macau’s revised gaming law for concessionaires to maintain a minimum capital requirement of MOP$5 billion (US$618 million).
In response MGM Grand Paradise has issued and allotted 4,070,000 Class A Subscribed Shares and 730,000 Class B Subscribed Shares to MGM China, which has transferred those 730,000 Class B Subscribed Shares to Ms Ho for a consideration of MOP$1.
Following completion of the share issue and transfer, MGM China now holds 84.6% of the voting rights in MGM Grand Paradise, with Ms Ho holding 15.0% and parent firm MGM Resorts International 0.4%.
MGM China noted that Class B shares granted Ms Ho and MGM Resorts only “de minimis economic rights” and that they do not hold any direct economic interest in MGM Grand Paradise or parent MGM China as a result of the capital restructuring.
However, Ms Ho, who already holds a 22.49% stake in MGM China, will be remunerated for taking on the Managing Director role to the tune of US$8 million per year, as well as incentive payments based on annual Adjusted EBITDA earnings.
