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Howard Stutz

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MGM Mirage explores Hong Kong IPO

19 Oct 2009

By Howard Stutz

LAS VEGAS, Nevada -- MGM Mirage may join its rivals with a listing on the Hong Kong Stock Exchange.

The Las Vegas-based casino operator, which owns 50 percent of the MGM Grand Macau, is exploring an initial public offering in the Asian market.

MGM Mirage Chairman and Chief Executive Officer Jim Murren said Friday the company could use proceeds from the offering to enlarge the MGM Grand Macau or fund potential expansion opportunities in the Chinese gaming enclave.

"If we could access the capital markets in Hong Kong, it could be very advantageous to us," Murren said.

MGM Mirage operates the 600-room MGM Grand Macau, which opened in December 2007 at a cost of $1.25 billion, with Hong Kong businesswoman Pansy Ho, the daughter of Macau casino kingpin Stanley Ho.

The company's relationship with Pansy Ho is being scrutinized by New Jersey gaming regulators because of her 88-year-old billionaire father, who international law enforcement authorities have alleged is tied to Chinese organized crime triads.

"(An IPO in Hong Kong) has been on the radar from the moment the joint venture was set up," Murren said. "Both partners are very open-minded to it and we believe it's a very viable and attractive option."

Any move on the Hong Kong Stock Exchange by MGM Mirage would follow two other American-based casino operators, Wynn Resorts Ltd. and Las Vegas Sands Corp.

Last week, Wynn raised $1.87 billion through Hong Kong's second-biggest IPO this year. Las Vegas Sands said in August it had applied for a Hong Kong IPO, which the company expects could raise at least $2 billion. The company hopes to complete its listing next month.

Wynn sold a 25 percent stake in the company's Macau operations to fund the IPO. It was unclear what percentage stake in its Macau assets Las Vegas Sands will put on the market.

"I think the Wynn model was a good model," Murren said. "They did almost everything right. It was fortunate timing and the market was receptive."

Murren said MGM Mirage would like to increase its foothold in Macau. Wynn operates Wynn Macau and is opening a $675 million hotel-casino next year. Las Vegas Sands has three Macau resorts and is hoping to restart construction on some of its stalled Cotai Strip projects with proceeds from its IPO.

Initially, Murren said MGM Mirage plans to complete 70,000 square feet of gaming space on the MGM Grand Macau's second floor. The joint venture also controls a Cotai Strip site for a potential hotel-casino and the company plans on looking for development opportunities on the Macau peninsula.

The interest comes at a time when the Chinese government may be implementing a new round of visa restrictions on visitation into Macau by mainland China residents.

Also, the Macau government has slowed expansion and the licensing of any additional casino projects.

"The rules are being modified and changed on what seems to be a week-by-week basis," Murren said. "The government has taken a thoughtful approach to the market. I don't think anyone knows what will happen specifically, but the market will grow opportunities."

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