HK-Australian Melco Crown takes over games and entertainment project Macao Studio City (macaudailytimes.com)

17 June 2011 11 h 09 min 10 comments

Construction of Macao Studio City could resume in 2012 and the resort could open in 2015, after gaming operator Melco Crown bought a 60 percent share in the project

By Vítor Quintã, macaudailytimes.com, 17 June 2011 

Gaming operator Melco Crown Entertainment has gained control of the long-delayed Macao Studio City project, after buying a 60 percent share in the Cotai resort developer. Melco announced the deal yesterday morning and co-chairman Lawrence Ho Yau Lung said at a press conference it would invest USD 1.7 billion (MOP 13.7 billion) in the development.

Construction on the new resort may resume in 2012 and it may open in 2015, Ho added. “Significant pilling and groundwork is already done,” he said. Melco is paying USD 260 million (MOP 2.1 billion) to an affiliate of eSun Holdings Ltd. for a 60 percent stake in Cyber One Group, the developer of the project.

Macao Studio City is projected to have 300 to 400 tables and 1,200 gaming machines when it opens, the son of gaming tycoon Stanley Ho Hung Sun said. Even though the number of tables in the local market is already close to the 5,500 cap set by authorities, the businessman recalled that the ceiling “will be lifted in 2013”.

“We hope the government will understand that to be viable, any resort needs a casino with enough tables.” Secretary for Economy and Finance, Francis Tam Pak Yuen, said last year that, from 2013 onwards, the annual growth of the number of gaming tables would be of only three to five percent.

Melco will again tap the debt markets to fund the expansion, he said, but this time through Cyber One Group. Last month the company clinched a USD 1.2 billion (MOP 9.6 billion) refinancing of the City of Dreams resort. In April Melco had also launched RMB-denominated bonds to raise around USD 350 million (MOP 2.8 billion).

Macao Studio City will focus more on the mainland China mass market

“City of Dreams targets more the high-end customers,” Ho said. “Macao Studio City will focus more on the mainland China mass market.”

eSun is selling its share to resolve a legal deadlock over the project, according to the company’s filing to the Hong Kong stock exchange yesterday. “The deadlock is best resolved commercially through the consummation of the transactions,” eSun said. “One of the partners had a bigger share in gaming, the other in non-gaming. Simply put, there was a conflict of interests,” Ho explained. “We were working on this deal for quite a few months and managed to untangle years of litigation.”

“I believe the government is happy to do away with [gaming] management contracts and prefers to have us as developer and operator,” the Melco co-chairman added.

The venture between Australian billionaire James Packer and Ho will also pay USD 100 million (MOP 803.3 million) to New Cotai Holdings, a company controlled by US-based funds that will keep a 40 percent share.

The land grant for the Macao Studio City project will expire in 2013, though Melco is “confident” the government will extend the period, Ho said. “We wouldn’t have done this deal without the blessing of the government and they know it’s impossible to build an integrated resort in 18 months.”

… / …

“The investors and the markets are as excited as we are,” Ho said. He said Macao Studio City was on the best site in Cotai, due to its proximity to the Lotus Bridge and a future stop of the Light Rapid Transit (LRT).

The original vision of a movie-themed resort is “a fantastic concept” and “very popular with Asian visitors,” the businessman said. “We are still working on the designs but you can expect some wild attractions.” The resort will include “a self-branded luxury hotel” with 1,200 rooms when it opens and a maximum of 2,000 rooms. It will also have 290,000 square feet of leasable retail area.

But entertainment “will be the core” of Macao Studio City, Ho said. The highlight will be a multi-purpose entertainment studio with anything from concerts of Cantopop stars to fights, he added.

In the meantime, Melco “will be slowing down” phase three of City of Dreams, which was to develop a hotel tower. “It’s a question of allocating capital,” Ho said.

About Melco Crown Entertainment Limited

Melco Crown Entertainment Limited is a developer, owner and through a Macau subsidiary which holds a gaming sub-concession, an operator of casino gaming and entertainment casino resort facilities. The Company currently operates Altira Macau (www.altiramacau.com) (formerly Crown Macau), a casino hotel located at Taipa, Macau and City of Dreams (www.cityofdreamsmacau.com), an integrated urban casino resort located in Cotai, Macau. The Company’s business also includes the Mocha Clubs (www.mochaclubs.com), which feature a total of approximately 1,600 gaming machines in eight locations and comprise the largest non-casino based operations of electronic gaming machines in Macau. The Company has strong support from both of its major shareholders, Melco International Development Limited (“Melco”) and Crown Limited (“Crown”). Melco is a listed company on the Hong Kong Stock Exchange and is substantially owned and led by Mr. Lawrence Ho, who is Co-Chairman, a Director and the CEO of the Company. Crown is a top-50 company listed on the Australian Securities Exchange and led by Executive Chairman Mr. James Packer, who is also Co-Chairman and a Director of the Company.

SOURCE: macaudailytimes.com (17/06/2011)  

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