MGM China has announced a new Contribution and Share Subscription Agreement that will see 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.
Under the agreement, MGM China will inject MOP$4.8 billion (US$594 million) into MGM Grand Paradise – which will tender for a new gaming concession – 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).
MGM Grand Paradise will then issue and allot 4,070,000 Class A Subscribed Shares and 730,000 Class B Subscribed Shares to MGM China, which will in turn transfer those 730,000 Class B Subscribed Shares to Ms Ho for MOP$1.
Upon completion of the share issue and transfer, MGM China will hold 84.6% of the voting rights in MGM Grand Paradise, with Ms Ho holding 15.0% and parent firm MGM Resorts International 0.4%.
This would bring the company in line with another stipulation of the new gaming law which provides 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.”
In a Sunday filing, MGM China said, “Upon the successful outcome of the Tender, additional duties and obligations will be imposed on Ms Pansy Ho pursuant to the delegation of authority to her as Managing Director from the MGM Grand Paradise’s board of directors.
“It is conditionally agreed that Ms Pansy Ho will serve as the Managing Director of MGM Grand Paradise for the same term as the Concession Term in consideration of the remuneration and incentive payments set out in the Services Agreement entered into between Ms Pansy Ho and MGM Grand Paradise.”
Ho, who currently 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 paid on a sliding scale, depending on the company’s Adjusted EBITDA earnings each year, to a maximum of US$95 million over the 10-year concession period.
The company said it expects the final award of new gaming concessions will be announced by the Macau government in November.
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