MGM Mirage said on Friday it will sell its 50 percent interest in the Borgata Hotel in Atlantic City in a settlement with New Jersey, which objects to the casino owner's partner in a separate venture in Macau.
MGM Mirage said it will cease business as a gaming licensee in New Jersey, if the settlement be approved by the New Jersey Casino Control Commission.
The settlement comes after New Jersey gaming regulators questioned the suitability of businesswoman Pansy Ho, MGM Mirage's venture partner in Macau, where MGM plans to conduct an initial public offering later this year.
Last year, the state Division of Gaming Enforcement recommended that the New Jersey Casino Control Commission find Ho an unsuitable partner and advised that MGM cut ties with her.
MGM said it disagreed with the New Jersey gaming entity's assessment of its Macau partner, and added that regulators in other jurisdictions where it operates casinos have either determined that the relationship with Ho is appropriate or have decided no further action is needed.
Since the (New Jersey gaming enforcement division) takes a different view, we believe that the best course of action for our company and its shareholders is to settle this matter and move forward with the compelling growth opportunities we have in Macau, Murren said in the statement.
The New Jersey Casino Control Commission, which must approve the settlement, is expected to hold a hearing on March 17, MGM said.
MGM Mirage, whose investors include billionaire Kirk Kerkorian, said it will be allowed to reapply for a New Jersey gaming license beginning 30 months after the completion of the sale of the Borgata stake.
The settlement calls for MGM Mirage to place its interest in the Borgata Hotel Casino & Spa and related leased land into a divestiture trust. The property must be sold within 30 months under terms of the pact.
The Borgata is operated by a 50-50 venture between MGM Mirage and Boyd Gaming Corp. MGM said the settlement does not affect Boyd's interest.
The Borgata is the most successful property in the Atlantic City marketplace, and we expect there will be strong interest in this valuable asset, MGM Mirage Chairman and Chief Executive Jim Murren said in a statement.
Shares of MGM Mirage were up 23 cents, or 2 percent, to $11.90 in morning New York Stock Exchange trading, while Boyd Gaming was up 4 cents to $8.64.
(Reporting by Karen Jacobs; Editing by Derek Caney)