Kerkorian, Paulson agree to be ‘cornerstone investors’ in MGM China

HONG KONG The Macau joint venture of MGM Resorts International has received US$190 million from four investors leading up to its initial public offering next month on the Hong Kong Stock Exchange.

Kirk Kerkorian, the founder and largest shareholder of MGM Resorts, is investing US$50 million into MGM China through his holding company, Tracinda Corp. Billionaire John Paulson, MGM Resorts’ second largest shareholder, has committed US$75 million to the venture. Hong Kong property tycoons Poon Jing of Asia Standard and Walter Kwok of Sun Hung Kai Properties are investing US$40 million and US$25 million, respectively.

As cornerstone investors, the four men are guaranteed large allotments in the IPO in exchange for agreeing to hold the shares a certain length of time. Cornerstone investors are often sought to support IPOs in Hong Kong to create a sense of scarcity for remaining shares.

The investment information is detailed in a draft prospectus that has not been formally made public, Dow Jones Newswires reports.

MGM China anticipates raising about US$1.5 billion from its IPO, which is scheduled to list on June 3. The IPO is structured so that MGM Resorts will obtain 51% ownership—and management control—of MGM China upon consummation of the IPO. Joint venture partner Pansy Ho would retain a 29% interest, with the remaining 20% sold to the public, with proceeds going to entities controlled by Ho.