Who bought Passport Management’s 28.78 percent stake in eSun Holdings, one of the partners in the Macao Studio City project?
As usual in Macau, rumours and conspiracy theories are coming thick and fast. The bookies’ favourites currently are either Pansy Ho, the daughter of SJM chairman Dr Stanley Ho (and a joint venture partner of MGM MIRAGE in Macau) or Angela Leong, the fourth consort of Dr Ho.
The reason for all the excitement is that eSun Holdings has a 66.7 percent stake in East Asia Satellite Television Holdings which in turn has a 60 percent stake in the putative developer of Macao Studio City and the project was originally costed at USD2 billion.
So whoever now controls Passport’s former stake in eSun (assuming of course it’s a single entity or person) has 28.78 percent of 66.7 percent of 60 percent of MSC. The stake held by eSun does not however entitle it to share in the revenues generated by the casino. That benefit accrues to the partners in the New Cotai vehicle. Given the relative underperformance of non-gaming assets on Cotai so far, the value of eSun’s stake in MSC must therefore be discounted considerably from the USD800.4 million that 66.7 percent of 60 percent of USD2 billion would normally be worth on paper.
Given that eSun had difficulty raising its share of the capital costs of MSC in the first place, it will probably be open to sensible offers for its stake.
Whoever did buy Passport’s stake may have been a speculator making a quick in and out deal in anticipation of eSun being bought out of the Macao Studio City project or it could be strategic positioning in order to get a stake in the MSC site should it come back on the market. The latter could be useful for Ms Leong in case she gets squeezed out of SJM in any succession battle goes one theory.
Passport Management, a California-based hedge fund, is currently in litigation with eSun regarding a rights issue announced by the latter in late 2008. Passport alleged the sole purpose of the issue was to dilute Passport’s holding in eSun.
As a hedge fund, Passport doesn’t under US Securities and Exchange Commission rules need to disclose who bought its eSun stake. However eSun, a company listed in Hong Kong, should in theory need to file details of the deal with Hong Kong Exchanges and Clearing Ltd (HKE). A month has now passed since Passport told eSun of the sale and no Hong Kong filing appears to have been made.
Could it be because the 28.78% stake has been sold off in parcels of less than 5% each? Only stake sales of 5% or more must be filed with the HKE.
A dim sum breakfast for anyone who can supply the answer to that one.
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