Inside Asian Gaming

INSIDE ASIAN GAMING | September 2011 18 Asian Gaming 50 – 2011 partners independent of MPEL in a complex corporate structure. That deadline came and went as the original partners fell out after liquidity issues emerged for one of the parties, eSun, following the global financial crisis of late 2008. This summer, MPEL moved in, cleaned up the MSC ownership structure and announced it would need to raise US$1.7 billion to finish it (US$100 million worth of foundations have already been put in). This new arrangement may have been agreed among the remaining MSC partners, but it still has to be signed off by the Macau government. Mr Ho and his company are treading very carefully when it comes to public statements on that issue. They will be mindful of others who have fallen foul of local lawmakers in the past by making premature announcements about casino or real estate permissions before they had been officially ratified. In terms of finance, however, MPEL is proceeding as if the MSC deal will be approved. It needs to, given the lead times that can be involved in capitalising large scale casino resorts in Macau. Mr Ho said in late June that the MSC project company would need to get debt and bank financing, including non-recourse financing, to complete the project. He added that would involve fresh contributions from MPEL, and two of the original MSC partners still involved—US-based hedge funds Silver Point Capital and Oaktree Capital Management. A flurry of market announcements in August, not long after the official shareholder sign-off on the MSC deal, pointed to MPEL’s determination to move quickly on its part of the financing. In early August, Nasdaq-listed MPEL said it had applied to the Hong Kong Stock Exchange to launch a dual listing in the Chinese territory in conjunction with a potential global share offering. That was followed days later by unofficial media reports citing insiders saying MPEL planned to raise between US$400million and US$600 million through a Hong Kong initial public offering in the fourth quarter of this year. Citigroup said it expected proceeds from any Hong Kong IPO to be put toward the US$1.7 billion cost of the Studio City project, but added it expected most of the expenses to be debt-funded. Sterne Agee added that despite recent volatility in Asian markets, a Hong Kong listing for MPEL might provide a valuation hedge against any sharp fall in US markets. Stern Agee noted that the Hong Kong-listed units of Las Vegas Sands and Wynn Resorts Ltd have both been trading at premiums compared with their capital market valuations in the United States. Lawrence Ho said in a statement that the move would put the company on par with Macau competitors who all have Hong Kong listings, would improve liquidity for shareholders, and give the company access to an additional source of capital and allow local investors to invest directly in MPEL. This time next year, we’ll know if the strategy has paid off. 6 (21) Angela Leong On-kei Executive Director SJMHoldings It was the 16th of July, 2008. The place was the Hong Kong Stock Exchange. The occasion was a ceremony to celebrate the l o n g - awa i t e d , l o n g - d e l a y e d listing of SJM Holdings, the new publicly traded arm of Stanley Ho’s casino empire. At his side—as the then 86-year-old tycoon ascended to the dais—was Angela Leong On-kei, or ‘sì- tai,’(‘fourth wife’) as she is popularly known. Ms Leong, from mainland China and four decades Dr Ho’s junior, was originally a professional dancer. By the time of SJM’s initial public offering she had made her way onto SJM’s board. She has borne Dr Ho five children during their two-decade long relationship. By this year she had risen further, to the position of Executive Director—effectively one of the top bosses of SJM—and by August an 8.21% direct shareholder after a series of transactions including several transfers of stock from her husband’s name to hers. When Dr Ho and a cast of lawyers finally brokered a truce earlier this year between his three surviving consorts and the children of his four families, it was Ms Leong who appeared to be the winner on points. Although Pansy Ho got a directorship of the parent company Sociedade de Turismo e Diversoes de Macau (STDM), it was Ms Leong who effectively was given control—at least for the next six years—of SJM Holdings. The battle—although not literally bloody in the manner of China’s ancient dynastic feuds—was certainly not pretty. It amounted to Ms Leong facing a hasty alliance of consorts number two and three and their children; principal among them Dr Ho’s most famous daughter, Pansy Ho. There was also the occasional intervention of a daughter from Dr Ho’s first family (his ‘real’wife, as the daughter concerned rather frostily described that particular Church- sanctioned domestic arrangement). The ‘alliance’ bloc made a move to transfer Dr Ho’s STDM shares—by which he exercised control of the business—to outside companies affiliated with Pansy Ho and others. Dr Ho took legal action to block it, albeit after the event. In the end, the legal principle that ‘possession is nine tenths of the law’seemed to come into play. The Pansy Ho faction got to keep most of the STDM shares, while Ms Leong—as the incumbent consort—got enough of a taste to give her a combined interest (directly and indirectly) in SJM of around 12%. And she not only got to keep an executive position at SJM, but saw it enhanced and entrenched. That means she is now the only member of the family directly running SJM’s interests in four directly-owned casinos and 14 ‘satellites’ (casinos licensed by SJM but not fully-controlled by the company). And with SJM on course for more than HK$70 billion (nearly US$9 billion) in casino win this year, it gives Ms Leong a significant amount of power and leverage in the Macau market.