Top banks to arrange two casino bond sales - Sunday 12th of June 2005

Two Macau casino outfits have picked bankers to arrange more than half a billion US dollars (HK$3.9 billion) in bond sales, according to bankers familiar with the situation.

In the bigger deal, K Wah Construction Materials, which earlier agreed to buy Galaxy Casino from real estate tycoon Lui Che-woo and his family, hired Morgan Stanley and Merrill Lynch to handle its US$300 million-plus bond sale, sources close to the deal said.

The two investment banks outbid five others for the company's first bond sale tied to its gaming project in Macau, market sources said. Pricing and a timetable for the sale are pending.

In April the Hong Kong stock exchange cleared the way for the company to buy 97.9 percent of Galaxy from K Wah chairman Lui Che-woo and his family for HK$18.4 billion.

Galaxy owns the Waldo casino in Macau, which opened last summer targeted at the city's high rollers. That startegy has paid off, with Galaxy commanding a disproportionate share of Macau's gaming revenues despite its small size relative to its 13 competitors.

The company had earlier raised HK$1.17 billion in an equity placement to fund its mega casino projects in Macau. Galaxy plans to invest in four Macau projects over the next five years, including the HK$1.83 billion Galaxy StarWorld and HK$4.08 billion Galaxy Cotai Mega Resort.

Separately, Venetian Macau, which is currently building a US$1.8 billion hotel and casino patterned after the renaissance trading city, turned to Goldman Sachs and Lehman Brothers to manage the sale of a US$260 million floating rate note, bankers said.

The company picked Goldman two years ago when it sold US$120 million in floating rate notes to fund the construction of the Sands Macau, the first Las Vegas-style casino to be built in the former Portuguese colony. The finance arm of Venetian Macau paid off the five-year notes in full last month plus the interest due investors at a cost of US$121.9 million. The bonds yielded 4 percent. The company's latest casino is set to open in 2007.

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