MGM China’s IPO on hold

The HKSE Listing Committee met last Thursday to consider MGM China’s application and ‘issued a comment letter as a part of their ongoing review process’.

The company did not disclose what was in the letter but Hong Kong and US media claim the stock regulator has doubts over the new shareholding structure following the listing.

Once the IPO is complete, MGM Resorts would take a 51 % controlling stake of the local operator, while the share of local businesswoman Pansy Ho Chiu King would drop to 29 %.

According to reports, the committee is also worried about MGM Resort’s decision to leave the New Jersey gaming jurisdiction after local regulators considered Pansy Ho an “unsuitable” business partner.

New Jersey regulators claimed Ho’s father, Stanley Ho Hung Sun, is linked to Chinese triads and organised crime.

“MGM China continues to work closely with the HKSE to address all remaining items in order to achieve a prompt listing of its shares on the HKSE,” the company stressed.

However, “the timing or terms of any such listing have not yet been determined, and there is no assurance as to whether MGM China will ultimately proceed with the listing, or whether the application will be approved by the HKSE,” the statement acknowledges.

Any delay that pushes MGM’s listing until after the opening of Galaxy Macau resort, scheduled for May 15, will harm the company’s valuation, Sterne Agee analyst David Bain told financial website TheStreet.

“We are expecting market share losses at MGM Macau post the Galaxy opening, and more share losses post the opening of Las Vegas Sands’ sites 5 & 6 next year. This potential share loss may be exposed to Hong Kong investors in more detail,” Bain said.

MGM China Holdings, registered in the Cayman Islands, is a vehicle company for local gaming operator MGM Macau, a joint-venture between MGM Resorts and Pansy Ho.