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Paulson, Kerkorian 'cornerstones' in MGM China IPO

18 may 2011, 14:36
US hedge fund giant John Paulson and gaming billionaire Kirk Kerkorian are reportedly among four cornerstone investors taking part in the $1.5 billion listing of Macau casino MGM China Holdings Ltd, AFP reports.

Paulson will sink $75 million into the tie-up between Las Vegas-based MGM Resorts International (MGM) and Pansy Ho, a daughter of Macau gambling tycoon Stanley Ho, according to a document seen by Dow Jones Newswires.

Kerkorian, the multibillionaire investor who founded MGM Resorts but will step down from its board in June, will buy up to $50 million worth of shares through his investment firm Tracinda Corp.

Tracinda holds a 26.85 percent stake in MGM Resorts, making it the largest shareholder.

Asia Standard International, controlled by Hong Kong businessman Poon Jing, has pledged up to $40 million, and a firm owned by Hong Kong developer Walter Kwok's family trust will buy up to $25 million on shares.

Cornerstone investors are given the option to buy vast portions of stock in an initial public offering if they agree to hold the shares for a certain length of time.

All four groups in the MGM China IPO have said they will keep their shares for at least six months.

MGM will have a 51 percent stake -- and management control -- in the listed joint venture.

Paulson made billions of dollars after being one of the few investors to predict the collapse of the US sub-prime mortgage market in 2007 that led to the global financial crisis.

New Jersey gaming regulators, in a report released last year, told MGM Resorts to cut its business ties with Pansy Ho after deeming her "unsuitable" because of her father's alleged triad links, or risk losing its state gaming licence.

In response MGM said it would instead leave New Jersey by selling a 50 percent stake in an Atlantic City casino-resort so it could keep its casino-hotel in Macau.

The former Portuguese colony is now the world's biggest gaming hub and a major profit source for several US gaming giants operating in the city.

Stanley Ho, who controlled Macau's gaming sector for four decades until it opened to foreign competition in 2002, has long denied rumours that he was tied to organised crime and allowed triad gangs to operate freely in his casinos.

In March, the 89-year-old tycoon said he had ended a bitter legal feud with family members -- including Pansy Ho -- whom he accused of trying to steal his vast gambling empire and a fortune worth at least $3.1 billion.

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