Nasdaq-listed gaming company Melco PBL Entertainment, which is spending US$3.7 billion on three casino resorts in Macau, will raise as much as US$250 million from a convertible bond sale to fund a share-buyback programme. The joint venture between Lawrence Ho Yau-lung's Melco International Development and Australian billionaire James Packer's Publishing and Broadcasting Limited (PBL) will issue bonds that can be swapped into its new shares at US$17.19 to US$18.42 each, according to a term sheet sent to investors. The exercise price range represents a 40 to 50 per cent premium to the stock's closing price in New York on Friday last week. Proceeds from the Merrill Lynch-arranged bond sale, includes a US$200 million initial offering and a US$50 million over-allotment option, will go a long way toward funding a buyback of Melco PBL shares. The company's free float at 17.2 per cent of market capitalisation is only worth about US$830 million. Trading in shares of Hong Kong-listed Melco International, which like PBL has a 41.4 per cent stake in the Nasdaq-listed firm, was suspended at midday yesterday pending an announcement of a price-sensitive transaction. 'This is a great deal for Melco [International] shareholders,' Morgan Stanley analyst Rob Hart wrote yesterday in a research note. 'Effectively the company has sold stock at US$19 at the end of last year and is now buying it back at US$12.25.' The buyback programme should also bring some relief for Melco PBL's shareholders. The stock closed last Friday at US$12.28, 48 per cent off its peak and at a 35 per cent discount to its initial public offering price. Melco PBL in May soft-opened its first casino, the US$583.6 million Crown Macau. After some initial delays the company announced earlier this month that the resort was fully operational with 222 gaming tables including 80 units reserved for high-stakes VIP play, 550 slot machines and a 216-room hotel tower all coming online. The company's flagship resort, the US$2.4 billion City of Dreams, will include three casino hotels and 650 serviced apartments when it opens on the Cotai Strip in stages beginning in March 2009. A third project on the Macau Peninsula with a boutique hotel targeting day-trippers is expected to cost US$675 million and is due to open in 2010.