Melco PBL plans Nasdaq float
Casino venture eyes US$1b from sale of 20pc stake to fund expansion in Macau
Melco International Development and Australia's Publishing and Broadcasting Ltd (PBL) hope to raise at least US$1 billion in an initial public offering later this year on the Nasdaq stock market, sources said.
Melco PBL Holdings - the joint venture controlled by Melco chairman Lawrence Ho Yau-lung and PBL chairman James Packer - plans to sell a 20 per cent stake to fund its expansion plans in Macau, which could overtake Las Vegas this year as the world's biggest gambling centre.
Melco shares jumped 12.27 per cent to an intraday high of $18.75 before closing for a gain of 8.68 per cent at $18.15 yesterday. Shares of Sydney-based PBL rose 5.38 per cent to close at A$18.99 ($111.16).
The offering was originally slated to come once the partnership's Crown Macau development was up and running, since a proven track record would help garner a richer price for the shares, said sources familiar with the deal.
However, the opening of the project, the joint venture's first casino hotel, has been delayed until April next year from its planned September launch. With cash needs of more than $9 billion this year and $12 billion next, the partners decided to go ahead with a share sale, the sources said.
Rising interest rates may also have played a role in the decision to advance the sale. Ben Yeung, an analyst at BOC International, said it would cost the venture between $700 million and $800 million in annual interest payments if it raised $10 billion through a syndicated bank loan.
'The proposed spin-off can help save these interest expenses,' Mr Yeung said, adding that Crown Macau's first-year operations would not throw off enough cash to cover interest costs of that magnitude.
The proposed Nasdaq listing was first reported by the Australian Financial Review yesterday. The paper said the share sale was subject to the companies receiving regulatory approval from the Macau government for the US$900 million purchase of a casino sub-concession from Wynn Resorts.
The report said the sale would value the joint-venture company at about US$5 billion.
News of the proposed share sale comes just a week after Melco PBL paid $1.5 billion for a waterfront site for its third Macau casino hotel. The investment in the project would eventually reach $2.7 billion.
In March, the joint venture agreed to pay Wynn Resorts US$900 million for Macau's last casino sub-concession.
Mr Yeung said the company probably would fetch a better price for its shares by listing in New York where investors were accustomed to gambling stocks. 'Macau gaming-concept stocks will be sought after among US investors,' he said.
Gaming revenue in Macau rose to US$5.76 billion last year and will more than double to US$12 billion by 2010 as tourist arrivals reach 35 million, according to CLSA.
For the first four months of this year, the Macau government said it took in 6.1 billion patacas from gaming taxes, up 15.7 per cent from a year earlier, and forecast revenue would climb a further 4 per cent to 17.19 billion patacas this year from last year.
