MGM China, following a statement from its parent company MGM Resorts in response to a letter sent by the Chinese subsidiary’s largest public shareholder Snow Lake Capital, released a statement of its own, claiming the company has no plans for ownership restructuring.
Open Letter to MGM Resorts
The letter from Snow Lake Capital which holds 7.5% in MGM China proposed to the parent company to consider selling 20% from its nearly 56% stake in the Asian subsidiary to a Chinese strategic partner from the internet, travel or leisure industries, to boost its chances for having its Macau concession renewed.
The 3 gaming concessions Macau government issued to Galaxy Entertainment Group, SJM Holdings and Wynn Macau in 2002, as well as the 3 sub-concessions issued to Las Vegas Sands, Melco Crown and MGM China later on, are set to expire in June 2022.
Macau chief executive Ho Iat Seng already publicly stated there would be no sub-concession renewals, in line with China’s State Council 2019 “Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area” directive.
Hence, some of the operators face a scenario in the upcoming revision of the gaming law planned to begin during the 1st quarter and end by the 4th quarter of 2021, in which a concession is refused, Snow Lakes outlined.
The institutional investment shareholder outlined 6 reasons that would justify such a restructuring for MGM China, among which alleviating any existing concerns regarding the retendering process and the financial and strategic benefits achieved with the sale proceeds.
MGM China Is A Separate Entity
On Wednesday, MGM Resorts issued response to the letter, outlining that MGM China is a separate publicly traded company. While confirming its commitment to Macau, the Las Vegas-based casino and hospitality operator noted it would continue to act in the best interest of its shareholders and stakeholders.
On Thursday, MGM China also responded to the proposal in a filing to the Hong Kong Exchanges and Clearing Limited (HKEX) and the Stock Exchange of Hong Kong Limited (SEHK).
The Asian subsidiary of MGM Resorts noted it acknowledged the open letter from Snow Lake Capital to the Board of Directors of its controlling shareholder MGM Resorts, in which the Hong Kong-based institutional investor recommended the restructuring.
“The Board confirms that, as at the date of this announcement, the Company has no plans of restructuring. The Board will continue to communicate with the Company’s shareholders and operate the Company in the best interests of its shareholders and stakeholders, enhancing shareholder value and performance of the Company.”
MGM China’s response to the shareholder letter did not have much effect on markets and its stock is holding steadily in the green zone after overcoming the slump at market opening.