elco Crown's other two casino's - the Altira and City of Dreams - are on Cotai island opposite the main city. But in a conference call for analysts to announce its fourth-quarter results earlier this month, the company quietly delivered the news that it had received payment for a deposit it had paid several years ago.
The decision to ask for the deposit to be repaid was the final nail in the coffin for the ambitious plans as the deposit ensured Melco had the option to buy a block of land for us$ 135 million from companies associates with the third wife of local gambling mogul Stanley Ho, Chan Un Chan. Mr Ho's son Lawrence Ho is James Packer's co-chairman of Melco Crown, and his listed Melco International, owns a third of the company.
Melco Crown had received a us$12 million refund in December 2009, the company said.
The Trinity was to be two towers - one with serviced apartments and a second containing a boutique hotel and a casino with 215 gambling tables and 500 poker machines. The site was not ideal as it was small and a short distance from the heart of the casino strip, and the purchase price was considered to be too high given its small size.
Melco Crown, which is 33 % owned by ASX-listed Crown Limited, engaged Las Vegas casino architect Paul Steelman to design the casino. Last week was the first time the deposit was explicitly mentioned, although the deposit dropped off their balance sheet in the first quarter of 2009.
The company's pre-tax earnings forecast for 2011 during the initial public offering roadshow was between us$ 700 million and us$ 900 million. Analysts consensus earnings for 2011 is now us$ 325 million. Fortunately equity investors were not factoring on any earnings from the third casino into their forecasts or valuation.
Melco Crown did not give a reason for not going ahead with the casino. However, the company is unable to make further acquisitions or build any casinos under the covenants in its credit agreement. The company posted rock-bottom earnings of us$ 2.7 million in the fourth quarter and is due to refinance a us$ 1.75 billion bank facility in the second quarter.
The failure is the latest in a series of ambitious plans - drawn up during the bullish 2006 period - to be aborted. Initially the City of Dreams was to have been an underwater casino, but it is now an ''underwater themed'' casino, because the costs would have been too high.
While the Altira, was set to be a ''six-star destination hotel'' but in reality is a high-stakes gambling den with its restaurants and bars idle most of the time.
Melco Crown was also meant to have a management contract to run the Macau Studio City casino, part of a huge retail and film studio hub that is not yet built. The project stalled during the global financial crisis, and there are doubts over whether construction will restart.