Inside Asian Gaming

INSIDE ASIAN GAMING | June 2009 8 Cover Story Control] Commission; therefore, no assurance can be given as to the ultimate impact of the report. The company added: “While we disagree with the recommendation of the DGE, we look forward to presenting our position at the hearing.” Pansy Ho said in a statement: “I and my advisers will need time to read and consider the contents of the report and decide how best to respond to it in due course.” On the State of New Jersey official website, the NJDGE describes its role as: “to protect the public interest by maintaining a legitimateandviablecasinogamingindustry, free from the influences of organized crime, and assuring the honesty, good character and integrity of casino owners, operators, employees and vendors.” Its 75-page report will be sent for adjudication to the New Jersey Gaming Control Commission (NJGCC), which could ask the company to dissolve its partnership with Ms Ho on pain of having its gaming licence for Atlantic City (where it jointly owns The Borgata Hotel Casino & Spa with Boyd Gaming) suspended. Bad timing At the time Inside Asian Gaming went to press, the NJGCC hadn’t scheduled a meeting to discuss the case. The news could hardly come at a worse time for MGM MIRAGE, which continues to face debt default risk on its US$8.6 billion CityCenter project in Las Vegas. As of December last year, the remaining project debt on MGM Grand Macau stood at US$818 million. Sources familiar with the New Jersey process say that in its assessment of the Pansy Ho-MGM MIRAGE deal it appears to be relying not just on historical (though MGM Grand Macau main hotel lobby The Borgata Hotel Casino & Spa in Atlantic City Contractual provisions If the New Jersey Gaming Control Commission rules Pansy Ho unsuitable as a partner for MGMMIRAGE inMacau, it would trigger a clause in the joint venture contract between the two partners. The clause outlines the conditions under which MGM would be allowed to cash out its share of the partnership according to documents seen by the South China Morning Post. The terms are as follows: • MGM has three days to notify Ms Ho and the Macau government of a formal finding of ‘unsuitability’; • MGM and Ms Ho then have 90 days to explain the situation to the Macau government; • MGM and Ms Ho have another 90 days to ‘use all reasonable endeavours’to get New Jersey to withdraw its ruling; • Failing that, MGM has 30 days to decide whether to sell its Macau stake. The alternative would probably be to sell its 50% stake in The Borgata in Atlantic City. • If MGM decides to sell out of Macau, it has 90 days to work with Ms Ho and the local government to identify three potential buyers for the stake and to secure a financial adviser to launch an auction process. After the auction is finished, MGM has 30 days to identify its preferred bidder to Ms Ho and the government. Ms Ho then has 60 days to match the offer, or to appoint a third party to match the offer. • If Ms Ho doesn’t make an offer, the sale to MGM’s chosen bidder proceeds. That firm must in turn offer to buy out Ms Ho’s share in the Macau venture at the same price. Ms Ho can sell all, part or none of her stake as she likes. The auction process up to this point could take more than a year. mention Ms Ho by name. Under review MGM MIRAGE added in its SEC filing: “The Company does not believe that the report will have a material adverse effect on it. However, since the report was issued on May 18, 2009, it is still being reviewed by the Company and may be the subject of a hearing by the New Jersey [Gaming