MGM MIRAGE (NYSE: MGM) today announced that the New Jersey Casino Control Commission (CCC) approved the settlement agreement between the Company and the New Jersey Division of Gaming Enforcement (DGE) under which the Company will sell its 50% ownership interest in the Borgata Hotel Casino & Spa and related leased land in Atlantic City.
“The DGE’s Report acknowledges there is no evidence that Pansy Ho has engaged in any wrongdoing or been accused of any illegal activity,” said MGM MIRAGE Chairman and CEO Jim Murren. “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.
“MGM MIRAGE structured its business relationship with Pansy Ho to ensure the highest standards of operation and compliance with all applicable gaming laws and to protect against any improper influence. We have had a very positive working relationship with Pansy Ho and have a spotless operating record at MGM Grand Macau, which opened more than two years ago. We are the only operator in Macau with a fully independent compliance committee and our joint venture meets the highest standards of good governance,” said Mr. Murren.
The Company owns the Borgata through a 50-50 joint venture with Boyd Gaming Corporation whose interest is not affected by the settlement.
Under the terms of the settlement, the company will place its interest in the Borgata and related leased land in a divestiture trust. The settlement mandates the sale of the trust property within a 30-month period. During the first 18 months, the Company will have the right to direct the trustee to sell the trust property, subject to approval of the CCC. If a sale is not concluded by that time, the trustee will be responsible for selling the Company’s interest in the Borgata and related leased land during the following 12-month period.
“The Borgata is the most successful property in the Atlantic City marketplace, and we expect there will be strong interest in this valuable asset. The agreement provides ample time for an orderly disposition of our interest to maximize its value to the MGM shareholders,” said Mr. Murren.
Prior to the consummation of the sale, the divestiture trust will retain any cash flows received in respect of the assets in trust, but will pay property taxes and other costs attributable to the trust property to the extent that minimum trust cash balances are maintained.
The Company will be the sole economic beneficiary of the trust and will be permitted to reapply for a New Jersey gaming license beginning 30 months after the completion of the sale.