he company is in talks with Australia & New Zealand Banking Group Ltd., Bank of America Corp. Barclays Plc, Deutsche Bank AG and UBS AG to arrange us$ 2.5 billion to us$ 2.7 billion of loans, said four people with direct knowledge on the matter, declining to be identified as the information isn’t public.
Melco PBL plans to invest us$ 3.31 billion over five years building three casino resorts including the 220-table Crown Macau, which opens tomorrow. Casino operators Sheldon Adelson and Stephen Wynn are vying for a greater share of Macau’s gaming revenue, which overtook that of Las Vegas last year.
“The casino industry in Macau is getting more and more crowded, so Melco PBL will really need to find its own niche to be able to survive,’’ said Louis Wong, a fund manager at Phillip Capital Management in Hong Kong, which manages us$ 40 million and doesn’t own gaming stocks.
Simon Dewhurst, CFO of Melco PBL, declined to comment on the size of the loan. “We’re negotiating with a group of banks for the debt, which we believe is the sensible way to raise funds for our projects in Macau,’’ He said in an interview yesterday. “We believe we’ll be in a position to make an announcement about it in the near term.”
Melco PBL is also building City of Dreams, a resort featuring an acrylic-and-glass gambling hall from which guests can view marine life. It is scheduled to be completed in phases starting in late 2008 on Macau’s Cotai Strip at a total cost of us$ 2.1 billion.
The venture is buying a third site, near the Hong Kong ferry terminal, for a casino and apartment complex costing as much as us$ 700 million. Melco PBL said it expects to open the project in mid-2009 should it succeed in completing the land purchase.
Its sales more than doubled last year to us$ 36.1 million, powered by the Mocha Slot Clubs, which operates a chain of more than 1,000 machines in cafe-style setting in Macau, according to Melco’s Web site.
Packer and Lawrence Ho, the son of billionaire Stanley Ho, raised us$ 1.14 billion in Melco PBL’s initial share sale in December. The venture later sold more American depositary receipts to boost the IPO by us$ 160 million. Melco PBL has no bank borrowings, Dewhurst said.
Stanley Ho, Wynn Resorts Ltd., Adelson’s Las Vegas Sands Corp. and Galaxy Entertainment Group Ltd. built their first casinos within walking distance of each other on the Macau Peninsula.
The venture’s relationships with so-called junket operators and VIP rooms “are strong enough to overcome its disadvantage in location,’’ Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG, wrote in a research note. Junket operators bring high-rollers to casinos and VIP rooms in Macau are run by franchise owners who share the house’s winnings with casino operators.
High-rollers account for two-thirds of Macau’s us$ 6.83 billion gambling market. Gamblers at VIP tables in Macau start their bets at a us$ 128, according to the city’s gaming regulator. The Las Vegas Strip had us$ 6.69 billion of gambling revenue in 2006, according to Nevada’s gaming control board.
Macau’s gambling revenue will grow 16 percent a year to reach us$ 11.6 billion in 2010, more than double the 6.9 percent pace of the US market, PricewaterhouseCoopers forecasts.
Las Vegas Sands recouped its us$ 265 million investment in Macau in eight months after opening the 740-table Sands Macau in 2004. That resort ended the four-decade monopoly of Stanley Ho, the 85-year-old tycoon whose share of gambling revenue has since plummeted to 55 percent and is still shrinking.
Melco PBL’s ADRs fell 3.6 percent to us$ 17.20 yesterday on the Nasdaq Stock Market. The stock has declined 9 percent since the IPO.