Experts differ on the IPO size being planned by MGM in Hong Kong

May 9, 2011 9:40 AM

            Experts took a different position over the weekend on the size of the MGM China Holdings initial public offering (IPO) set to begin trading in early June on the Hong Kong Stock Exchange.

            In a story by Fox Hu for Bloomberg news service, the Macau casino that is jointly owned by MGM Resorts International (MGM) and local businesswoman Pansy Ho will spin off 20 percent of its value to be publicly-traded, just as the Asian spin offs of Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS) were offered in IPOs.

            Hu said his sources indicated the company may try to raise as much as $1.5 billion in its IPO while Donny Kwok of Reuters said his information was that the IPO size could be cut to $802 billion from the nearly $l billion originally planned, “because of uncertain market conditions.”

            Actually, the decision probably will be made when the company kicks off its “road show” marketing campaign beginning next week. Handling the marketing are the financial giants Bank of America Corp.’s Merrill Lynch unit, JP Morgan Chase and Morgan Stanley.

            Under a plan announced recently, Pansy Ho will offer 20 percent of her company stake to be used in the IPO and will sell another 1 percent to her partner, thus giving MGM a 51 percent share of the company. Also, Ho will give up her management position in the Macau operation.

            Once the IPO has been completed, Ho will loan MGM Resorts International $300 million with notes that will have three to five-year maturities.