he Hong Kong-based company is offering 37.5 million American depositary shares, or 112.5 million common shares, Melco Crown said in an e-mail. The sale may be expanded by 10 % to cover excess demand. The number of shares on offer represents a 7 % stake in Melco Crown, according to Bloomberg calculations.
Melco Crown is raising capital to accelerate repayment of a us$ 1.75 billion project loan facility that financed the building of City of Dreams, the second-largest casino in the only Chinese city where casinos are legal. The gamble on a revival of Macau’s gaming market nearly doubled its market share in the city.
Macau’s gambling revenue and visitor arrivals fell amid a global recession last year, prompting rival Las Vegas Sands Corp. to halt construction on a neighboring project in November. Casino sales rose 3.1 % in July from a year ago, narrowing the decline in the first seven months to 10 %, Portuguese news agency Lusa reported August 3.
City of Dreams, with 516 gambling tables, opened on June 1 on Macau’s Cotai Strip, complete with Hard Rock and Grand Hyatt Hotels as well as a multimedia theater and shops.
The complex, situated across the road from Asia’s largest casino resort, the Venetian Macao run by billionaire Sheldon Adelson’s Sands, attracted about 1.2 million visitors in its first month of operation, Melco Crown shareholder Melco International Development Ltd. said in a statement to the Hong Kong stock exchange early last month.
The new complex helped lift Melco Crown’s share of Macau casino revenue to 17.8 % in July, from just above 9 % the month before. All or part of the us$ 189.2 million estimated net share sale proceeds will be used to repay the City of Dreams loan facility, Melco Crown said in a filing to the U.S. Securities and Exchange Commission.
About us$ 1.68 billion of the loan facility was outstanding at the end of June, the SEC filing said. Melco Crown could also use the proceeds for future expansion and working capital, it said. Simon Dewhurst, chief financial officer of Melco Crown, couldn’t immediately be reached for comment. Stanley Ho’s son Lawrence is chief executive officer of Melco Crown.
Citigroup Inc. and Deutsche Bank AG, whose affiliates are among lenders of the City of Dreams loan, are managing Melco’s share sale, which is expected to be priced August 12 after the U.S. market closes, the e-mail said. Melco Crown’s shares have gained 62 %this year after slumping 73 % in 2008.