Halfway around the world, MGM Resorts International is facing agitation from stockholders in Macao. “Earlier today, MGM Resorts disclosed that Snow Lake Capital, an Asian investment firm with a 7.5% stake in MGM China (rated Neutral by DS Kim), sent a letter to its board pushing for MGM to sell a 20% stake in MGM China to a strategic Chinese consumer, travel and/or leisure company,” Greff wrote. MGM holds 56% of MGM China at present and, other than Pansy Ho, Snow Lake is the second-largest shareholder in the joint venture. Snow Lake is shopping for an investor with “significant non-gaming resources,” with an eye toward making the company more attractive to Macanese authorities, whenever they get around to re-tendering gaming concessions.
Also desired by Snow Lake is a greater concentration of power under Pansy Ho, integrating MGM China with Sociedade de Jogos de Macau. It’s dangling the idea of generating capital for MGM that the latter can plow it into Osaka, prompting Greff to ask, “Is Japan a tangible high ROIC opportunity, and how long from now will this be? Is it worth trading Macau now for Japan uncertainty?” (We answer “No, when Hell freezes over, and no.”) Newly freed-up equity could also be invested in online sports betting, although Greff is skeptical. There are a couple of other Snow Lake strategic rationales but we’ve touched upon the biggies.
Greff argues that “Macau still matters and selling down at these levels is premature,” prefacing his conclusion by saying, “we have a tough time seeing MGM selling its equity anywhere close to current levels for this to make sense, following two tough years for Macau fundamentals (2020 was COVID-19 and 2019 GGR was negatively impacted by US-China trade/relations).” As he says, we’re “not sure it really goes anywhere.” We’re not convinced MGM is sufficiently desperate as to sell a bird in the hand for not even two in the bush.
Meanwhile back at corporate headquarters, MGM has picked Jonathan Halkyard as its new CFO. If the name sounds familiar it’s because Halkyard held the same position at Caesars Entertainment before being ousted by Gary Loveman. Since then he’s been hanging his hat at Extended Stay America. He’s associated with the worst years of Caesars, its ill-advised LBO and ensuing bankruptcy. That said, he’s certainly well-acquainted with adversity, which MGM presently faces. He replaces Corey Sanders, who moved up to COO of MGM. “We respect Jonathan’s corporate finance IQ, his ability to think strategically, and like his background in gaming, industry M&A, and hospitality/REIT operations in general. We think he adds to MGM’s bench strength and could see him, eventually, taking on additional larger roles at MGM,” opines Greff, although isn’t a little early to be contemplating successors to Sanders and CEO Bill Hornbuckle? Their chairs are scarcely warm.
How do you keep museum tours viable during a pandemic? The Mob Museum has devised a self-guiding audio tour, featuring anecdotage by Oscar Goodman, as well as background info read by volunteer docents. The new tour treats 40 exhibits and runs 85 minutes … hardly enough to cover all the museum’s riches but a hefty start. Did you Al Capone was a bandleader in prison? Who was the “Kiss of Death Lady”? And what does forensic evidence from the St. Valentine’s Massacre tell us? These and other questions will be answered on the audio traversal. Alas, you won’t learn who offed Jimmy Hoffa or Bugsy Siegel, although both topics are raised. If you’ve been to the Mob Museum, it’s a reason to return and if you haven’t—why the heck not?