GGRAsia – MGM China to spend US$41 million on dividend payment

MGM China to spend US$41 million on dividend payment

Mar 27, 2020 Newsdesk Latest News, Macau, Top of the deck

The board of Macau-based casino operator MGM China Holdings Ltd has recommended the payment of a final dividend of HKD0.083 per share (US$0.01) to the company’s shareholders.

The Hong Kong-listed company said in a filing on Thursday it expected to spend around HKD315.4 million on the dividend payment. That represented approximately 16.3 percent of the company’s profit for calendar-year 2019, it added.

The final-dividend payment requires approval by shareholders at the company’s annual general meeting. No date for it has yet been announced.

In a separate filing, the firm also announced the appointment of Bill Hornbuckle as MGM China’s chairperson. He replaced Jim Murren in that role.

It had been announced in mid-February that Mr Murren was to step down from his leadership role at U.S.-based MGM Resorts International, the parent of MGM China. MGM Resorts on Sunday said Mr Hornbuckle, the firm’s chief operating officer and president, was taking over from Mr Murren as acting chief executive.

MGM China operates two properties in the Macau market: MGM Macau (pictured in a file photo) on the city’s peninsula; and MGM Cotai in the Cotai district.

MGM China had previously paid an interim dividend of HKD0.094 per share, amounting to approximately HKD357.2 million. It was approved in August last year.

The firm said in its latest announcement that – taking into account the interim dividend and the proposed final dividend – MGM China expected to spend the equivalent of 34.8 percent of the firm’s 2019 profit in dividend payments.

MGM China’s dividend policy – announced in 2013 – states that any semi-annual dividends paid to shareholders, may not, in aggregate, exceed more than 35 percent of the anticipated consolidated annual profits of the firm in any one year.

“The board has recommended the payment of the final dividend after reviewing the group’s financial position as at March 26, 2020, its capital and liquidity requirements going forward and other factors that the board considered relevant,” MGM China said.

It added that, upon such review, the board had determined that the firm had “sufficient resources after the payment of the final dividend… to finance its operations and expansion of its business.”

MGM China’s announcement comes as Macau’s casino market faces a challenging business environment related to the negative impact of the Covid-19 pandemic on operations. That includes a number of travel restrictions making it hard for gamblers to visit the city: the latest such restriction was announced on Thursday, with authorities in Guangdong now imposing a 14-day quarantine requirement for people entering the province from Macau and Hong Kong.

The main beneficiary in aggregate cash terms of the final dividend payment by MGM China will be its majority owner, MGM Resorts. The latter controls 55.95 percent of MGM China’s issued share capital.

MGM Resorts itself is also struggling with the negative impact of the Covid-19 pandemic on business. The firm announced on March 15 the suspension of operations at its properties in Las Vegas, Nevada, amid concerns linked to the spread of the Covid-19 virus. Days after MGM Resorts’ announcement about its Las Vegas operations, Nevada’s governor ordered a shuttering – until at least mid-April – of the state’s casinos and other non-essential businesses like bars and cinemas, as part of efforts to contain the pandemic.

Fitch Ratings Inc said on Wednesday that MGM China was likely to report a 31-percent decline in full-2020 revenue The credit research firm added that MGM China would in likelihood post a 50-percent decrease in earnings before interest, taxation, depreciation, amortisation, and restructuring or rent costs (EBITDAR) in calendar year 2020..

The Macau government has halved its forecast for the city’s casino gross gaming revenue (GGR) in full-year 2020, due to the negative impact of the Covid-19 pandemic on the local economy, and the gaming industry in particular. Such forecast for this year now stands at MOP130 billion (US$16.3 billion), down from a projected MOP260 billion, as announced in November.

The Macau authorities have been implementing a number of measures to stem the spread of the novel coronavirus that causes the disease Covid-19, a public health threat that has now reached pandemic – i.e., global – proportions. Such measures involved the closure of the city’s casinos for a 15-day period in February and stringent rules about who is allowed to enter the Macau region. Entry restrictions remain in place and have recently been tightened.

Macau’s casino industry recorded MOP3.1 billion in GGR for February, down 87.8 percent from the prior-year period, according to official data. Last month’s result puts the market’s accumulated 2020 year-on-year decline at 49.9 percent, to MOP25.23 billion.