Philippine unit of Melco Crown plans share issue

Shareholders have approved the sale of up to 1.2 billion shares and sources say the issue could raise about $175 million.
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Melco Crown is putting its bets on the Philippines as a growth market for gaming (AFP) </div>
<div style="text-align: left;"> Melco Crown is putting its bets on the Philippines as a growth market for gaming (AFP) </div>

Manchester International Holdings, a Manila-listed holding company that is in the process of being taken over by Macau casino operator Melco Crown Entertainment, said yesterday that it plans to issue up to 1.2 billion new shares.

Melco Crown has earlier said that it intends to manage and operate its Philippine businesses through Manchester, including the $1 billion casino, hotel and entertainment project that it is developing together with three Philippine partners. Hence, it can be expected that the share issue, which will consist of a base deal of 1 billion shares and an overallotment option of 200 million shares, will help to pay for Melco Crown’s $600 million share of the development costs for the new casino.

Based on the closing price of Ps14.80 for Manchester’s B-shares yesterday the share issue, the base deal could raise as much as Ps14.8 billion ($363 million). However, sources have earlier said that the deal is more likely to be around $175 million.

It is expected to hit the market in the near future, possibly later this week. Sources say ATR KimEng, Citi and UBS are working on the transaction.

To underline the new ownership and business direction, Manchester said in the same announcement that it will change its name to Melco Crown (Philippines) Resorts Corp. The name change and the new share issue were both approved at a special shareholders meeting yesterday.

The company will also simplify its shareholding structure by moving to just one class of shares. At present, 40% of its share capital is in the form of A-shares, which are reserved for Filipinos, while the remaining 60% are in the form of B-shares. Following a restructuring, that also includes an increase in the authorized share capital, Manchester will have 5.9 billion single class common shares.

Melco Crown announced in December that it would pay about $30.8 million for a 93.06% stake in Manchester. Its existing Philippine businesses will then be acquired by the listed entity.

Melco Crown, which is a joint venture between Hong Kong-based Melco International Development and Australia’s Crown Limited, has earlier said that an expansion into the Philippines, where it expects strong returns on capital, should further diversify its exposure in Asia and deliver incremental sources of earnings and cash flow. It will also give the group a larger platform for further expansion and opportunities to drive shareholder value.

“The company considers its experience in developing world-class integrated resorts, such as the City of Dreams in Macau, will allow it to take advantage of the anticipated growth in the leisure and tourism industries in the Philippines, which will cater to an increasingly affluent and growing Asian middle class that continue to seek new travel destinations and experiences,” Melco Crown said in a filing with the Hong Kong stock exchange in December.

In 2011, the Philippines Department of Tourism recorded 3.9 million visiting tourists. South Koreans and Americans are the largest tourist groups at present, but the number of Chinese visiting the Philippines continues to grow,

To help in its endeavour, Melco Crown has teamed up with SM Investments, which is one of the largest conglomerates in the Philippines, local property developer Belle and gaming and leisure company Premium Leisure and Amusement, which is the entity holding the license to operate an integrated casino resort.

However, Melco Crown will have the exclusive management, operation and control of the project.

The casino group currently operates Altira Macau casino hotel, the City of Dreams resort and the Mocha Clubs, which is the largest non-casino based operation of electronic gaming machines in Macau. It is also developing the planned Studio City Project, a cinematically-themed integrated entertainment, retail and gaming resort on the Cotai strip.

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