Melco will not use HK listing for Studio City
Macau casino developer Melco Crown Entertainment says it will not need to tap equity markets to fund its planned Studio City casino complex.
The company's pending listing in Hong Kong 'by way of introduction' will see the firm's shares trade on both the local bourse and Nasdaq, where it has been listed since 2006. But the listing will not raise new funds since it does not involve selling new shares.
Melco Crown, in which Lawrence Ho Yau-lung's Melco International Development and Australian James Packer's Crown Limited each own a 33.65 per cent stake, is currently waiting on Macau government approval to move forward with construction of Studio City, which would be its second property on the Cotai strip.
The Hong Kong listing allows the firm to sell new shares to local investors to raise funds for projects like Studio City, but executives yesterday appeared to rule that out in the near-term.
'We're not in need of resources right now, but [the listing] gives us flexibility in the future,' said Ho, son of Macau gaming magnate Stanley Ho Hung-sun.
The company announced plans to list in Hong Kong in August this year, when shares in most Macau gaming firms were hitting record highs, and reports at the time said it planned to raise US$600 million.
But shares in Macau casino firms have plunged since then along with the broader market. Melco Crown's Nasdaq-traded American Depository Receipts have fallen to US$8.75 each as of Tuesday from a peak of US$15.97 on August 1.
Melco Crown in June struck a US$360 million deal for majority control of the aborted Studio City project, agreeing to pay US$260 million to acquire the 60 per cent previously held by Peter Lam Kin-ngok's eSun Holdings and Singapore's CapitaLand.
Melco Crown will also pay US$100 million over the next two years to New Cotai Holdings, a firm controlled by US funds Silver Point Capital and Oaktree Capital Management, which will retain a 40 per cent stake in Studio City and co-develop it alongside Melco Crown.
The company has 'made significant redesigns' of the original Studio City plans and is 'waiting for the proper government processes' before it begins construction, Ho said yesterday.
Melco Crown already operates the City of Dreams casino complex on Cotai and the Altira casino hotel on Taipa Island.
It plans to start building on the Studio City site in the first half of 2012, and it is expected to be completed in 36 months, according to the listing prospectus.
The project, located at the base of a bridge that connects Cotai to neighbouring Zhuhai's Hengqin Island, would include entertainment, retail and casino elements as well as four-star and possibly five-star hotel rooms.
How much, in US dollars, the Studio City construction project will cost
- It is expected to be completed by 2015