The end-game reward on how much MGM Resorts International (NYSE: MGM) will add for shareholder value via a Hong Kong IPO of its MGM China Holdings Limited in Macau is still a work in progress.  It was just on Monday that the company disclosed its filing of an A1 with the Hong Kong Stock Exchange.

Filing in China is sometimes a bit less transparent at first due to regulations aimed at preventing an over-heat in hot IPOs.   MGM China Holdings Limited is a Cayman Islands company which was formed by MGM Resorts International and Ms. Pansy Ho.

MGM China Holdings Limited will become the owner of “substantially all of the economic share interests of MGM Grand Paradise, S.A., a joint venture of MGM Resorts International and Ms. Pansy Ho, which owns and operates the MGM Macau, a luxury resort, hotel and casino located in Macau, SAR.”

Also as part of the filing process, the company filing noted that no timing nor the terms of any such listing, nor even whether the proposed transaction will ultimately be approved and listed, have been set.

CEO Jim Murren was already on CNBC and unfortunately he could not offer any details on the numbers and trends seen in Macau because of restrictions in the IPO filing process.  He also referred to the Las Vegas market recovery as a “slow recovery” environment.

Oddly enough, a new public standalone company did not really harm peers.  Melco Crown Entertainment Ltd. (NASDAQ: MPEL) closed up at $5.25 Monday after a $4.90 close Friday, although shares are marginally lower so far on Tuesday.  Las Vegas Sands Corp. (NYSE: LVS), which was just raised to Hold from Underperform at KeyBanc Capital Markets this morning, is up 1.65% at $35.70 today and it traded up to $35.10 on Monday versus a $33.73 close on Friday.  Wynn Resorts Ltd. (NASDAQ: WYNN) did not fare as well with a $87.12 close on Monday versus a $90.20 close on Friday.

The data from the MGM Resorts’ 2009 Annual Report filed back in in February 2010 showed that the 2009 comparison (for its 50% ownership) was currently at the time just 593 units of guestrooms and suites with 215,000 square feet of casino space versus a system-wide 50,765 units and 2.097 million in square feet of casino space.  The difference is in the concentration as the slots at Macau were 938 units versus 34,966 system-wide units and gaming tables were 429 versus a system-wide count of 1,985.  This data may be very different now, and it is obvious that the expansion plans will be far greater down the road.

Here is a description per the 2009 annual report: MGM Grand Macau occupies an approximately 10 acre site which it possesses under a 25 year land use right agreement with the Macau government. MGM Grand Paradise Limited’s interest in the land use right agreement is used as collateral for MGM Grand Paradise Limited’s bank credit facility. As of December 31, 2009, approximately $850 million was outstanding under the bank credit facility.

As of June 30, MGM Resorts listed $1.013 billion in cash and $2.118 billion in long-term investments versus total assets of $19.987 billion.  MGM is not immune to leverage as many is the case with many casino operations: it held $13.046 billion in long-term debt and it listed another $2.653 billion in deferred long-term liability charges.

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JON C. OGG

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