Melco Plans for HK$8B Underwater Casino in Macau

Melco International Development, controlled by Macau casino tycoon Stanley Ho, plans to raise HK$1.175 billion by issuing five-year term convertible loan notes to fund the cost of land needed for its HK$8 billion underwater casino project in Macau.

The company plans to issue non- interest bearing convertible loan notes worth HK$1.175 billion to Stanley Ho's family trust at HK$19.93 per share, which is at a 2.7 percent premium to its closing stock price. The conversion price was calculated as the average closing price of the share for the last five trading days up to and including the last trading day on May 10. After full conversion of the notes, a maximum of 58.96 million new shares will be issued which represent 12.01 percent of the issued share capital of Melco or 10.71 percent of the enlarged issued share capital. The proceeds will be spent to fund the net cost of the 113,325-square-meter leasehold land on Cotai Strip, which was granted by the Macau government to Melco's joint venture with Australia's Publishing and Broadcasting Limited. The joint venture plans to build the world's first underwater casino and entertainment resort named ``City of Dreams'' and it will initially hold a 25-year lease on the land. Thereafter, the lease may be renewed upon payment of a nominal land rent. Total investment of the project is estimated at HK$7.96 billion, consisting of HK$1.68 billion for land and the land premium while the bulk of the funds -- HK$6.28 billion -- will be spent on construction.