Melco set to undertake capital restructuring

The operator of City of Dreams Manila is taking formal steps to restructure its capital to eliminate accumulated deficits.

Melco Resorts and Entertainment (Philippines) Corp. said in a Philippine Stock Exchange filing that it had filed an application for equity restructuring in the Securities and Exchange Commission (SEC).

Filings were also made by subsidiaries MPHIL Holdings No. 1 Corp., MPHIL Holdings No. 2 Corp. and Melco Resorts Leisure (PHP) Corp., it said.

Under the plan, Melco is seeking to increase the par value of its common shares from P1 to P500,000 while cutting the total number of common shares from 5.9 billion to 11,800 shares.

In case fractional shares are created, major shareholder MCO Investments Ltd. will purchase them at P7.25 each, based on the prereverse stock split offer.

The company will then apply part of its additional paid-in capital of P22.26 billion against a deficit of P134.57 million as of the end of December 2018.

“If the restructuring is approved by the SEC, the resulting value of each company’s accumulated deficit will be reduced to P0.00. There will be no changes in the amount of each company’s total stockholders’ equity as a result of the restructuring,” Melco Resorts said.

MCO Investments concluded on Nov. 29 a tender offer for Melco Resorts’ shares that increased its stake to over 90 percent. The group had previously signaled its intention to delist Melco Resorts.

Melco Resorts earlier disclosed that year-on-year net income in the first quarter of 2019 fell 46 percent to P286.77 million as revenue growth failed to keep up with rising costs.

Total operating revenue during the period rose 2 percent to P7.51 billion, the bulk of which came from casino revenues, which rose 3 percent to almost P6 billion. Total operating expenses, however, rose 6 percent to P6.67 billion.