What is the Equity
of Melco, Las Vegas Sands, and Wynn worth if its Macau Gaming license was
revoked for violations of law, thus subjecting it to asset seizer by the Macau
Government?
Real simply: (From Melcos 20-F)
“Termination
Rights. The Macau government has the right,
after notifying Wynn Macau, to unilaterally terminate Melco Crown Gaming’s
subconcession in the event of noncompliance by us with our basic obligations
under the subconcession and applicable Macau laws. Termination
of the subconcession contract may be enforced by agreement between Melco Crown
Gaming and Wynn Macau, but is independent of Wynn Macau’s concession. A mutual
agreement between the Macau government and Melco Crown Gaming can also result
in termination of the subconcession. Upon termination, all of our casino premises and gaming
equipment would revert to the Macau government automatically without
compensation to us and we would cease to generate any revenues from these
operations.” Melco
20-F, PG 61
Who's potentially in violation?
Wynn:
- · Government Bribes SEC Opens Inquiry of Wynn Resorts: WSJ: Feb 12, 2012
Las Vegas Sands / China Sands:
- · Bribery: Bribe report reveals mainland envy
- · Prostitution: Former Sands exec alleges prostitution in Macau casino sites Fox News, Jun 28, 2012
Melco:
- · Packer casinos linked to Macau bribes case: Sydney Morning Herald, Feb 20, 2009
- · New Jersey Gaming commission ruled Pansy Ho, Stanley Ho’s daughter, was an unfit partner for casino operator MGM due to her fathers ties to organized crime. It seems logical then that Lawrence Ho, Melcos CEO and Stanley’s son, should also be deemed unfit; especially when considering the role Stanley had in starting Melco and the outflows of cash from Melco to Stanley related entities. Read Melco 20-F (Pages 48-50)
- · See page 8 of my report for a more detailed analysis on Stanley Ho and Co: (ex ties to Gerova Financial and Sino-Forest.)
Casino Junkets tied to all 3:
“Concessionaires and
subconcessionaires are jointly liable for the activities of their gaming
promoters and collaborators within their casinos”. Melco
20-F, PG 57
For more information about
the Junkets, criminal debt collection, Mafia envolvment, and the dark side of
Macau I suggest: www.Casinoleaks-macau.com
Equity Tranche gets
Torched.
Violation and subsequent revocation of casino license
Under Macau law, a casino operator’s license could be revoked for things mentioned above. Should this happen, these leveraged casino companies can not generate cash to meet its bond payments thus would fall into default—insolvency itself subjects a company to license revocation and potential asset seizer. 2 strikes. Regardless if the government seizes assets or not, when a credit event occurs (missed payment), bond holders can demand immediate repayment in full, which is impossible, so its assets/subsidiaries will be liquidated. One thing is for sure… equity holders are going to get torched.
Who wins in this situation?
Well the banks and deal arrangers who made millions in fees; the Government of Macau who just inherited casino and hotel buildings at zero cost; the corrupt officials who no doubt will have a piece in the auctioning off of them, and the person most likely to be Johnny-on-the-Spot when those assets are sold at auction—Dr. Stanley Ho, the man who up until 2002 had a 40 year monopoly on gambling in Macau.
Well the banks and deal arrangers who made millions in fees; the Government of Macau who just inherited casino and hotel buildings at zero cost; the corrupt officials who no doubt will have a piece in the auctioning off of them, and the person most likely to be Johnny-on-the-Spot when those assets are sold at auction—Dr. Stanley Ho, the man who up until 2002 had a 40 year monopoly on gambling in Macau.
All the right people win and all the wrong people lose.
Is this realistic risk?
I think so. Take a
look at a corporate structure at the link below and see how far down the later
the concerns of the equity tranche are.
And remember…
The parties which control 2/3’s of the
company….
“will have a
substantial influence over us, and their interests in our business may be
different than yours.” PG.
31
Twitter: Donald_Shekels
Reports: scribd.com/Russian_Research/shelf
Reports: scribd.com/Russian_Research/shelf
Contact me if interested in consulting research
agreements, job offers, or if you just wish to buy out my research.
Next Up: Report: Melco corporate structure evolution: capital
flow analysis, comparison between CDO and synthetic CDO's with that of
companies “projects”, and support for my personal theory—that Melco is acting
as a conduit for Macro Hedge funds building short positions in the Chinese and
Hong Kong real estate markets. How its
hidden, merged onto the balance sheet, where it came from, and how the banks
construct the short using Melco equity shares (ex Emerson/Grande DB busted).
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