MGM Resorts pledges commitment to Macau following largest shareholder Chinese investment request

The MGM Resorts International Board of Directors has issued a statement responding to a statement by its largest stakeholder asking for a 20 per cent share of MGM China to be sold, underlining that it ‘remains committed to Macau’ but that will continue to take actions that are in the best interests of its shareholders and stakeholders.

Yesterday, Snow Lake Capital Limited, an Asian investment management firm was reported as having sent a letter to MGM Resorts International Board of Directors urging them to sell 20 per cent of local gaming concessionaire MGM China to a Chinese company as a strategic investor.

The group founded in 2009 and has offices in Hong Kong and Beijing describes itself as ‘a leading Asian alternative investment management firm with over US$3 billion assets under management’.

Snow Lake Capital owns 285.4 million common shares of MGM China Holdings Limited, approximately 7.5 per cent of the outstanding shares making it the largest public shareholder of MGM China.

“We have been long-term investors in the Macau gaming industry. We think it is in MGM Resorts International’s best interest to introduce a leading Chinese consumer internet or travel & leisure company as a 20 per cent strategic shareholder in MGM China,” the group stated in an open letter.

“As discussed previously with MGM Resorts International Chief Executive Officer, William Hornbuckle, we believe such a transaction will create a win-win transaction for all parties involved and deliver significant shareholder value to both companies”.

The group even presents some “suitable candidates” which it believes could complement MGM China in diversifying to non-gaming, including Chinese travel and internet platforms such as Meituan and Trip.com, leading Chinese hotel chains such as Huazhu Group, or culture & tourism project operators such as Sunac China.

Snow Lake then presented six reasons or which it believes MGM should take this course of action, including that a new strategic investor is believed to bring significant non-gaming resources to both MGM China and Macau “a crucial factor for the gaming concession re-tendering in 2022” and that a potential partnership between MGM China Co-Chairman Pansy Ho and the new strategic investor could play a significant role in Macau’s diversification and Greater Bay Area integration.

The group also added that with a more certain outlook of securing a new gaming concession, MGM China “will be rerated and unlock value for all shareholders” and the transaction could provide MGM Resorts International with enough capital to fully commit to its Osaka, Japan gaming integrated resort project

It could also grant it the more financial flexibility to pursue M&A in the secular growth market of online sports betting and gaming, Snow Lake says.

In its response to the letter, MGM Resorts Board of Director stated that it “appreciates continued constructive engagement with MGM China shareholders”.

MGM Chinas’ total revenue in the first nine months of 2020 stood at HK$2.73 billion, down by 83.9 per cent year-on-year, as the pandemic seriously disrupted the local gaming sector.