15 de enero de 2010 / 8:26 / hace 8 años

DEALTALK-Amid hurdles, MGM pushes on with HK IPO

6 MIN. DE LECTURA

* MGM could raise up to $500 mln in HK IPO by Q2 2010

* But concerns about Pansy Ho joint venture are an overhang

* Valuations could be cheaper than Sands China and Wynn Macau (For more Reuters DEALTALKs, click [DEALTALK/]

By Sui-Lee Wee and Kennix Chim

HONG KONG, Jan 15 (Reuters) - Like its fellow Las Vegas peers before it, casino company MGM Mirage (MGM.N) is pushing ahead with plans to list its Macau operations on the Hong Kong stock exchange, hoping to raise up to $500 million as early as the second quarter of this year.

If the initial public offering goes ahead, MGM, whose largest shareholder is billionaire Kirk Kerkorian, would be the third U.S. casino marquee name since November to float its Macau operations on the Hong Kong stock exchange.

But achieving a high valuation for its IPO may be tough amid lingering concerns about its 50-50 joint venture partnership in Macau and lack of expansion plans in the enclave, the world's largest and fastest-growing gambling market located an hour away by ferry from Hong Kong.

"Wynn and Sands were priced at 13 times (EV/EBITDA) multiples and MGM is a relatively weaker player, so the market would probably put a discount on it at 11.5 times," said Gabriel Chan, a gaming analyst with Credit Suisse.

"The Pansy Ho-MGM partnership is always an overhang," he said. "Obviously if they don't come up with new development plans, by default, their market share could go down."

Two sources familiar with the matter say the firm's original hope was to seek Hong Kong regulator approval to list before mid-February, and float its Macau unit sometime in the first quarter, soon after its rivals list their Macau operations on the Hong Kong exchange. The sources could not be named as they were not authorized to talk publicly about the matter.

Now an MGM Macau IPO is looking more like a second-quarter event at the earliest, according to analysts and investment bankers who have spoken to the company about its plans.

The company has not decided how much it plans to raise from the IPO, but two analysts in recent research notes have said the deal is expected to fetch between $375 million and $500 million.

MGM was not available for comment.

As for which banks will underwrite the IPO, MGM is deliberating the selection process. BNP Paribas (BNPP.PA) and HSBC (HSBA.L) (0005.HK) are existing lenders to the company, a role that may put them in a better position to get the IPO mandate than others.

UBS UBSN.VX (UBS.N), the underwriter of both Sands' and Wynn's Hong Kong IPOs, may also be in a good position for the mandate. J.P. Morgan (JPM.N) is also maneuvering for the IPO role, the sources say.

Hong Kong investment bankers began pitching to the company on helping to bring the IPO forward as early as November.

MGM's Macau joint venture has drawn scrutiny in the United States. In May, New Jersey's gaming enforcement division issued a report recommending that MGM sever business ties with Pansy Ho, Macau gambling tycoon Stanley Ho's daughter. [ID:nN19429283]

In August, New Jersey reopened its review of the gaming license held by MGM and Boyd Gaming Corp (BYD.N) -- a 50-50 venture that operates Atlantic City's Borgata -- over concerns raised by an investigation of the Macau venture.

MGM CEO Jim Murren told Reuters in October that the firm is looking to organize "financially and legally" its Macau joint venture with local businesswoman/tycoon Pansy Ho so it could access the Hong Kong initial public offering market. [ID:nN15312688]

No Growth Story?

Analysts say investors may be wary of a repeat of Sands China's (1928.HK) weak flotation in November, when the firm's shares fell 10 percent below its issue price amid concerns of steep valuations and oversupply in Macau. [ID:nHKG22995]

Sands China raised $2.5 billion in its IPO in November, while Wynn Macau (1128.HK) raised $1.87 billion in October. The offerings were among two of the top ten IPOs in Asia last year and helped Hong Kong achieve the status as the exchange that produced the world's largest IPO proceeds.

MGM, which has come close to defaulting on its debt, has only one casino property in Macau, the MGM Grand Macau, and has not shed light on its expansion plans.

In contrast, Sands plans to build five properties on the Cotai strip, a swathe of reclaimed land some Macau developers have touted as the next Las Vegas strip, while Wynn is scheduled to open the extension of its Macau resort, Encore Macau, in April.

Already, the MGM-Pansy Ho joint venture has the weakest market share in the enclave, at just under 9 percent for 2009. This compares with Sands, which has a market share of 23 percent, and Wynn, which has a share of 15 percent, according to analysts. (Editing by Michael Flaherty and Muralikumar Anantharaman)

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