MGM China, a venture between a Pansy Ho Chiu-king and MGM Resorts International, received formal government approval to build its second resort in Macau. The stock rose strongly.
The venture would pay a land premium of 1.29 billion patacas and annual rent of 2.15 million patacas to develop a five-star hotel and a casino resort, the government's gazette said yesterday.
The new project will give MGM China its first resort in Macau's Cotai area. The company joins other operators including Galaxy Entertainment and Sands China in expanding in the gambling hub.
The lease would last for 25 years, the gazette said.
MGM China made initial payments to the Macau government for the project, the company said in a statement to Hong Kong's stock exchange in October last year. The formal approval allows the company to proceed with construction plans on the 71,833 square metre site.
MGM China, partly owned by Ho, the company's chairman, jumped 7 per cent to HK$15.86 for its highest close since August 2011. The benchmark Hang Seng Index rose 0.46 per cent.
"The formal approval means everything is set for MGM China to move ahead," said Gabriel Chan, an analyst at Credit Suisse.
The casino resort, which will include 1,600 hotel rooms, 500 gaming tables and 2,500 slots, will take as long as 36 months to build, according to a statement from MGM. It will cost about US$2.5 billion.
Galaxy, controlled by Lui Che-woo, has said it plans to invest as much as US$6.5 billion to expand the third phase of its resort in Cotai. The company expects to begin construction, which will cover about 929,000 square metres, at the end of this year or early next year.
Gaming revenue in Macau jumped 14 per cent to a record 304 billion patacas last year.