Ho, Packer team up for $8b Cotai resort - Thursday 12th of May 2005

Tycoon Stanley Ho muscled his way into Macau's embryonic Cotai casino hub Thursday, with plans for a massive complex centred on an underwater casino.Ho's partner, Publishing & Broadcasting Ltd, the Australian casino operator controlled by tycoon Kerry Packer, unveiled the project in an Australian stock exchange filing. It is the latest initiative of its joint venture with Melco International Development, a Hong Kong-listed company controlled by the Ho family.Until now, Ho was conspicuously absent from the race to develop casino resorts in the Cotai reclamation area between Coloane and Taipa islands, where rivals Las Vegas Sands and Galaxy Casino are investing billions to erect massive gaming palaces on the scale of those on the Las Vegas Strip.

Karen Tang, an analyst with Deutsche Securities, said the 1.2 million-square-foot site snapped up by PBL and Melco was not previously allocated to either Galaxy or Las Vegas Sands.PBL said the joint venture will pay US$214 million (HK$1.67 billion) for rights to the site, including a US$64 million development premium. The purchase will be funded through debt financing and company funds, PBL said.Melco's shares were suspended from trading Wednesday pending its own statement on the project, which was still awaiting stock exchange clearance Thursday. Melco hopes to raise about HK$1.6 billion through a share placement to help fund its portion of the HK$8 billion project. Under the terms of the joint venture, Melco will hold 60 percent and PBL 40 percent.PBL, which did not put a value on the project, said the complex will include three hotels, 1.5 million square feet of serviced apartments, an upscale shopping mall and a 4,000-seat theatre. The hotel portion will include two four-star hotels and one five-star hotel with a total of 2,000 rooms.Described as a showcase for tropical marine life, the casino will be operated by Ho-controlled Sociedade de Jogos de Macau and include 450 tables and 3,000 slot machines. Construction is to begin later this year, with an opening set for mid-2008.Market watchers expect Melco's stock to fall when trading resumes.

Melco's shares dropped 3.5 percent Tuesday ahead of the trading suspension. The Standard/Bloomberg Macau Gaming Index slipped to a three-month low Thursday.Melco's plan to sell more shares is likely to fuel bearish sentiment among investors already made skittish by lower-than-expected first-quarter profits at Las Vegas Sands Macau operations and the difficulties encountered by K Wah Construction Materials last month raising funds for its HK$18.4 billion buyout of Galaxy Casino. Melco is expected to place its new shares at HK$19, 17 percent less than the 52-week high reached a month ago. The new project will be the third venture in Macau for Melco and PBL. The two are investing HK$1.5 billion to develop the Park Hyatt casino hotel on Taipa and control the growing Mocha Slot chain of electronic gambling parlours. They are also bidding to build a HK$11.8 billion casino resort in Singapore.

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