MGM China is set to pump USD594 million into its Macau casino operator as the company prepares to bid for a new license amid the law overhaul.
In the city’s biggest gaming reform, the amended law requires a share capital of MOP5 billion “in order to ensure sufficient financial capacity.”
The injection, therefore, set the stage for a rebidding process for licenses as gaming concessions are slated to expire at the end of December, following a six-month extension after all six operators paid at least MOP47 million.
In a Hong Kong stock exchange filing Sunday, it noted that if MGM Grand Paradise gets its new license, Pansy Ho will serve as managing director of the unit for the entire term of the license with an annual salary of USD8 million.
The daughter of late casino tycoon Stanley Ho will also be entitled to incentive payments of up to USD95 million over the license term, based on MGM Grand Paradise’s earnings.
MGM China also said it would transfer 730,000 Class B shares to Pansy Ho to meet the new capital requirement.
The revised law requires executive directors who are Macau permanent residents to hold at least 15% of the share capital of the license holder, up from 10%.
MGM China, along with the other five operators, have been bleeding millions of dollars of cash each day as the city continues to face tourism and economic turmoil.
Public health policies remain in a commercial headwind in the region as arrivals into Macau have been severely limited.
During the first half of 2022, the gaming operator recorded a total revenue of approximately HKD3.2 billion, compared to HKD4.7 billion in the same period a year ago.
Since January, the city’s big six have racked up losses as high as USD2 billion as the city adheres to a zero-Covid strategy which requires the border to remain closed to foreign arrivals.
All gaming operators have expressed intent to submit their proposals for the license bid amid revenue losses of up to 50% in the second quarter.
For the gaming operator, the idea of a significant investment would have to be something they understand and consider, noting that the government wants bids to include corporate social responsibility, employment and job opportunities.
MGM China has also expressed that “sports and entertainment is a big push.”
