In a May 2009 report to the CCC, the DGE requested that MGM Mirage sever its business relationship with its Macau partner, Pansy Ho, managing director of Shun Tak Holdings Ltd. Ho is also daughter of Hong Kong billionaire Stanley Ho, who allegedly has ties to organized crime. The DGE report, which was made public for the first time Wednesday, determined that Stanley Ho was "unsuitable" as a joint venture partner and that his daughter had failed to demonstrate that she was personally, professionally and financially independent from him.
MGM Mirage chairman and CEO Jim Murren says in a statement issued Wednesday that the DGE report "acknowledges there is no evidence that Pansy Ho has engaged in any wrongdoing or been accused of any illegal activity. Gaming regulators in the other jurisdictions where we operate casinos are well aware of this matter, had access to the same information as the New Jersey gaming regulators and have all either determined that the company's relationship with Pansy Ho is appropriate or that further action was not necessary."
Nonetheless, the DGE says MGM Mirage opted not to contest the report before the CCC but instead agreed to sell its share of Marina District Development Corp., the JV that owns the Borgata. In so doing, MGM Mirage is admitting no liability and retains the right to receive all proceeds of the sale of its interest in the Borgata, according to the DGE. The settlement does not affect Las Vegas-based Boyd Gaming Corp., which owns the other half of MDCC and is the casino's operating partner.
The settlement with DGE mandates that MGM Mirage will turn over its 50% interest in the Borgata to a trustee under a trust agreement which was also approved Wednesday by the CCC. James Zazzali, former chief justice of the New Jersey Supreme Court, was appointed as the trustee.
MGM Mirage will participate in the first 18 months of the sale process. If no sale has been completed in 18 months, Zazzali will have sole authority to direct the sale process for the remaining 12 months. Under the settlement, MGM Mirage will be the sole economic beneficiary of the divestiture trust, according to DGE documents.
With 2009 casino revenues of $695.3 million, "the Borgata is the most successful property in the Atlantic City marketplace, and we expect there will be strong interest in this valuable asset," Murren says in a release. "The agreement provides ample time for an orderly disposition of our interest to maximize its value to the MGM shareholders." Overall, Atlantic City casino revenue fell 13.2% year-over-year in '09, but the Borgata had the smallest 12-month decline at 5.9%, according to CCC figures.
Pursuant to the settlement, MGM Mirage will pay for all regulatory costs associated with implementing the settlement and divesting the half interest in the Borgata. Thirty months after the sale is completed, MGM Mirage can reapply for a casino license in Atlantic City.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
