Under the agreement, Pansy Ho, the daughter of Macau gambling tycoon Stanley Ho, would receive a 29 percent stake in the company, MGM China Holdings Ltd, which has been created as a listing vehicle for the IPO. MGM Resorts would hold 51 percent and the public would receive 20 percent.
"We view the proposed restructuring as a positive for MGM shares, given that MGM maintains a majority ownership in its most valuable asset," Jefferies analyst David Katz wrote in a note to clients.
The company plans for MGM China to be listed on the Hong Kong Stock Exchange.
Surging demand from the hoards of Chinese gamblers that flock to play in Macau -- the only place in China where gambling is legal -- has sustained double-digit growth in the world's largest gambling market.
Net proceeds from the offering will be remitted to an entity controlled by Ho. Through an intermediary entity, she will use a portion of the proceeds to invest in MGM Resorts convertible senior notes.
That investment is also a positive for MGM, Katz said, because it will generate net proceeds of $311 for the company by the completion of the IPO, expected by June 30.
An IPO would make MGM Macau the last of Macau's six gambling licensees to go public.
The original partnership between Ho and MGM split the asset 50-50.
MGM could not comment further, citing Hong Kong Stock Exchange regulations governing IPO quiet periods.
MGM's shares rose 7.3 percent, or about 93 cents, to $13.54 in late morning New York Stock Exchange trading.
(Reporting by Helen Chernikoff and Brad Dorfman; Editing by Maureen Bavdek)
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