The MGM/Pansy Ho JV is developing the $1B MGM Grand Macau, set to open Q3'07, with other Macau projects possibly to follow. Nevada and New Jersey regulators have been investigating for over a year so approval of the MGM partner would be a positive catalyst for the stock. Macau accounts for 15% of UBS' MGM target.
If Pansy Ho not found suitable by Nevada regulators, the JV agreement calls for MGM to sell its interest, which includes a gaming subconcession purchased for $200M in '04 as well as the $1B property. MGM does not have right to buy Pansy Ho's interest. If found unsuitable by New Jersey, MGM could decide to sell its Macau interest or its 50% of the Borgata.
Maintains Buy and $82 tgt.
Notablecalls: Expect to see some buy interest following the call. Would not overstay my welcome.