Macau casino developer Melco Crown Entertainment said yesterday it might attempt to raise up to US$400 million by selling new shares in what would be the largest Macau equity deal in at least six months.
The Nasdaq-listed company, a joint venture between Lawrence Ho Yau-lung's Melco International Development and Australian James Packer's Crown, said it had yet to hire an underwriter or determine the size or price of the offering.
But a blanket registration document filed yesterday with United States Securities and Exchange Commission - a precursor to a sale of new equity - said Melco Crown might consider using the proceeds to pay down debt, fund ongoing developments or for general working capital.
Melco Crown's US$1.53 billion in debt as of December was 9.8 times last year's cash flow - but its major loans do not start coming due until 2012. Analysts read the move as 'purely opportunistic' as it follows on the heels of a rally in gaming stocks and anticipates that winning streak continuing. They expected Melco Crown to use proceeds from an equity sale to bolster its relatively healthy balance sheet.
While bulging debt loads continue to pose risks for firms like Las Vegas Sands Corp and MGM Grand Paradise, shares in other casino operators have staged a promising rally in the year to date.
Melco Crown's shares are still down 62.51 per cent from loftier heights a year ago, but in the year to date have risen 50.79 per cent. Galaxy Entertainment Group has climbed 40.51 per cent this year while SJM Holdings has added 15.98 per cent.