GGRAsia – MGM China shareholders confirm US$41mln final dividend

MGM China shareholders confirm US$41mln final dividend

May 29, 2020 Newsdesk Latest News, Macau, Top of the deck

The shareholders of Macau-based casino operator MGM China Holdings Ltd have approved the payment of a final dividend of HKD0.083 per share (US$0.01), the company announced.

The dividend payment – referring to the year ended December 31, 2019 – was approved during MGM China’s annual general meeting, held on Thursday.

MGM China’s final dividend payment 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.

To cope with the financial impact caused by the Covid-19 crisis, some Macau casino operators have decided not to recommend dividends in the short term. Melco Resorts and Entertainment Ltd, Wynn Macau Ltd and Sands China Ltd, have respectively announced such an approach.

Earlier this week, MGM China said it had been granted a new HKD2.34-billion revolving credit facility. It stated the proceeds of the facility would be used for ongoing working capital needs and general corporate purposes of the group.

MGM China said in late March it expected to spend around HKD315.4 million on the final dividend payment. That represented approximately 16.3 percent of the company’s profit for calendar-year 2019, MGM China added at the time.

The main beneficiary in aggregate cash terms of the final dividend payment by MGM China will be its majority owner, U.S.-based MGM Resorts International. The latter controls 55.95 percent of MGM China’s issued share capital. That means MGM Resorts should get about HKD176.5 million in final dividend proceedings.

MGM Resorts itself is also struggling with the negative impact of the Covid-19 pandemic on business. The firm suspended in mid-March operations at its properties in Las Vegas, Nevada, amid concerns linked to the spread of the Covid-19 virus. Some properties are scheduled to start reopening on June 4.

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 March 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.

It was announced in April that MGM China’s first-quarter net revenues were just under US$271.9 million, down 63 percent from the prior-year quarter, impacted by the Covid-19 pandemic. The firm reported a US$22.0-million quarterly loss in adjusted earnings before interest, taxation, depreciation, amortisation, and restructuring or rent costs (EBITDAR) for the first three months of 2020, compared to a positive US$192.8 million in the prior-year period.

MGM China is undergoing a leadership change. Its long-serving chief executive Grant Bowie is retiring with effect from May 31. The company is yet to name a successor for the CEO post.