MGM Mirage To Sell Borgata Stake In Settlement With NJ Regulators

Date : 03/12/2010 @ 10:17AM
Source : Dow Jones News
Stock : Boyd Gaming Corp. (BYD)
Quote : 28.46  -0.24 (-0.84%) @ 3:59PM

MGM Mirage To Sell Borgata Stake In Settlement With NJ Regulators

M G M Mirage (NYSE:MGM)
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MGM Mirage (MGM) will sell its 50% stake in the Borgata Hotel Casino & Spa in Atlantic City, as widely expected, in a settlement with New Jersey gambling regulators.

Shares rose 1.4% in early trading to $11.83 while Borgata partner Boyd Gaming Corp. (BYD) climbed 1.4% to $8.72.

The regulators had raised concerns about the suitability of MGM Mirage's business partner in Macau. Chairman and Chief Executive Jim Murren reiterated Friday that the casino operator disagrees with the New Jersey regulators. He said other regulators have determined the relationship with Pansy Ho is appropriate or decided further action isn't required.

MGM Mirage disclosed last year that New Jersey's Division of Gaming Enforcement had issued a confidential report saying the company should disassociate from Ho, the company's joint venture partner in Macau. It labeled her an "unsuitable" business partner.

The filing didn't elaborate why. But in 2005, the New Jersey regulator reviewed MGM Mirage's Macau joint venture with Ho and submitted a report to the state gaming commission saying that "over the years there have been numerous public allegations suggesting that Stanley Ho [her father] has ties to Asian organized crime." He has never faced charges and has disputed the accusations.

The New Jersey Casino Control Commission plans a settlement hearing Wednesday. The deal calls for MGM Mirage putting its half of Borgata into a divestiture trust and selling the stake within 2 1/2 years. The company can reapply for a New Jersey gambling license 2 1/2 years after the sale.

Borgata had an original price tag of $1.1 billion when it opened in 2003. Boyd and MGM Mirage have since invested an additional $600 million through an expansion.

MGM Mirage hopes that its plan to sell its Atlantic City interests will convince New Jersey regulators to agree to curtail their regulatory oversight of the company. Any additional scrutiny has the potential to cause problems with operations elsewhere.

MGM Mirage's decision to leave Atlantic City is an indication of how the broader gambling business has shifted to Asia. Gambling revenues in Atlantic City are at their lowest point in more than a decade, while Macau is expanding rapidly. Macau has now surpassed Las Vegas in gambling revenue and showed 48% year-over-year growth in December.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com

(Alexandra Berzon, Jonathan Cheng And Jeffrey McCracken of the Wall Street Journal contributed to this story)

 
 

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