bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

sponsorType

authorLocations

authors

paywallTypes

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

factSheets

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

copyrighted

customTimezone

liveContents

SCMP Reporter

Fold 'em or hold 'em for MGM? 
If New Jersey's Casino Control Commission sides with its investigators, it will rule Pansy Ho Chiu-king  an 'unsuitable' Macau partner for MGM Mirage and order MGM 'to disengage itself from any business association with its Macau joint-venture partner'. 
That is no small 'if'. The CCC has in the past parted ways with findings recommended by its investigators, and in any case is expected to hold a public hearing on the matter before it makes a final decision. 
In the event New Jersey regulators issue a ruling of 'unsuitability', that would trigger a complex, if foresighted, 35-point clause in MGM's Macau joint venture contract with Ms Ho. 
The clause spells out the conditions under which MGM would be allowed to cash out its share of the partnership, which opened the US$1.25 billion MGM Grand Macau in December 2007.  Here's how it would work according to the contract:
1. MGM has three days to notify Ms Ho and the Macau government of a formal finding of 'unsuitability'.
2. MGM and Ms Ho then have 90 days to explain the situation to the Macau government.
3. MGM and Ms Ho have another 90 days to 'use all reasonable endeavours' to get New Jersey to withdraw its ruling. 
4. If that fails, MGM has 30 days to decide whether to sell down its Macau stake. It seems the alternative to this is to sell down its 50 per cent stake in Atlantic City's Borgata  casino hotel, exiting the New Jersey market. 
5. If MGM decides to sell out of Macau, it has 90 days to work with Ms Ho and the local government to identify three potential buyers for the stake and to secure a financial adviser to launch an auction process. 
6. After the auction is finished, MGM has 30 days to identify its preferred bidder to Ms Ho and the government.
7. Ms Ho then has 60 days to match the offer, or to appoint a third party to match the offer. 
8. If Ms Ho doesn't make an offer, the sale to MGM's chosen bidder proceeds. That firm must in turn offer to buy out Ms Ho's share in the Macau venture at the same price. Ms Ho can sell all, part or none of her stake as she likes. 
The auction process up to this point could take more than a year. And if you get the impression it would be a complicated sale, you are probably correct. 
Still, if the stake does end up on the auction block there would likely be no shortage of buyers. The Genting Group  comes to mind as one of the potential buyers. 
Malaysia's monopoly casino outfit is the largest in Asia by market capitalisation and has been trying since 2001 to gain entry to the Macau market. 
In early 2007, Genting's Hong Kong-listed Star Cruises unit announced plans to build a HK$4.7 billion Macau casino to be operated by Stanley Ho Hung-sun's  SJM. The casino was originally supposed to open this year on 87,000 sq ft of reclaimed land across from the Wynn Macau, but the site sits undeveloped. 
More recently, Star Cruises bought a tower at Macau's Nova City,  a residential complex developed by Mr Ho's Shun Tak Holdings. 
And more recently still, this week, two of the Genting group's Kuala Lumpur-listed units - Genting Bhd and Resorts World Bhd - bought a combined US$100 million worth of bonds issued by MGM and secured by the US firm's Bellagio and Mirage casinos in Las Vegas. 
Of course, all Macau bets are off should MGM decide to resolve the situation in New Jersey by instead cashing out of its 50 per cent stake in the Borgata. 
Indeed, Steve Wynn  resolved repeated disagreements with New Jersey regulators back in the mid-1980s by selling off his Golden Nuggett Atlantic City and focusing on Las Vegas. 
MGM Mirage may decide a similar exit from New Jersey's shrinking casino market is its best bet. 




All In