Melco raises P5.5B for expanded resort

Casino operator Melco Crown (Philippines) Resorts Corp. has raised P5.48 billion from a top-up equity placement, proceeds from which will boost capital outlays for the upcoming City of Dreams Manila project.

The equity deal was priced at P11.30 per share, a discount to the closing price of P12.18 per share at the local stock exchange on Tuesday. Melco went on a voluntary trading suspension on Wednesday as the company pursued this equity deal with the help of the Hong Kong branches of Deutsche Bank AG and UBS AG.

Under the top-up scheme, the controlling shareholders of Melco lent for sale 485.177 million secondary shares for a quicker fund-raising exercise, but they will subsequently subscribe to the same amount of primary shares. As such, proceeds will go to the company and the public float will rise from about 23.62 percent to 31.17 percent after the subscription.

“The transaction allows the corporation to raise capital in a most expeditious and efficient manner with the least cost in order to fund its capital expenditures for the completion of City of Dreams Manila, the integrated hotel, gaming, retail and entertainment resort project in the Bagong Nayong Pilipino-Entertainment City complex,” Melco said in a disclosure on Thursday.

Melco intends to use the proceeds to fund the development of the City of Dreams project, including payments for gaming equipment purchases, fit-out work and other various initial operating costs, such as pre-opening expenses and working capital, as well as for general corporate purposes.

Upon approval of the PSE of the application for a block sale, the shares will be crossed through the facilities of the exchange.

On Wednesday, Melco announced that its board had approved an increase in the total budget for City of Dreams Manila to $832 million (P37 billion) from $680 million (P28 billion) alongside the top-up equity placement.

City of Dreams Manila, which will open by October this year, is the second integrated resort to open at Pagcor Entertainment City which is being groomed as the country’s version of the Las Vegas gaming strip.

A partnership between the Melco group of Macau and the SM group’s Belle Corp., City of Dreams Manila will have a casino, hotel, retail and entertainment areas in its integrated resort. It will have six hotel towers, including the Crown Towers Hotel, Nobu Hotel and Hyatt City of Dreams Manila, numerous specialty restaurants and bars, gaming facilities, a multi-level car park, as well as three separate entertainment venues.