Pansy Ho could be left as the proud owner of a whole Macau casino if MGM MIRAGE and its famous lion end up stuffed by a pile of debt.
The notion is not as fanciful as it might seem. MGM MIRAGE, a 50/50 partner with Ms Ho at the USD1.25 billion MGM Grand Macau, has reportedly been in talks with bankers about relaxing covenants on its USD7 billion-worth of loans.
However, the company has already signalled that it may default on its existing debt unless it can find a new source of cash. That would dent not only MGM MIRAGE’s pride but potentially set off a chain of events leading to bankruptcy.
If MGM MIRAGE did seek protection under Chapter 11 of the US Bankruptcy Code, that could spark a fire sale of assets by the appointed trustees. That in turn could leave Ms Ho well placed to pick up the remaining 50% of the equity in MGM Grand Macau for a song. One potential sticking point is that she would also be picking up 50% of the remaining project debt as the MGM Grand Macau has not yet reached break even.
There would also be the small matter of potentially rebranding and re-marketing the whole venue without the famous big cat. This includes the whopping great statue guarding the main entrance to the property and the maned logo the length of a family saloon hanging above the popular entrance facing downtown Macau. Let’s not also forget the venue’s Lion’s Bar, a popular watering hole with the city’s expat community as well as visitors. If MGM MIRAGE was bought out, the new management could hardly call it Ho’s Bar. ‘Pansy’s Place’ doesn’t quite work either.
The potential lion-killer for MGM MIRAGE is the USD8 billion CityCenter project in Las Vegas. It seemed a great idea during more bullish times. Now with falling real estate prices and falling rental yields it looks more like a white elephant.
As anyone who watches wildlife documentaries on TV knows, a fully-grown elephant is more than a match for a lion.
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