Melco seeking Studio City loan

Local gaming operator Melco Crown Entertainment is in negotiations with banks to try to raise up to MOP 16 billion in debt to fund the development of long-delayed Macao Studio City project.
According to sources quoted by Bloomberg, the Hong Kong-listed company is seeking a loan of around USD 1.5 billion (MOP 12 billion) and will also issue bonds worth USD 1 billion (MOP 4 billion), Reuters adds
Melco is currently negotiating with banks to ensure the financing, in case there are not enough takers. The company is about three to four weeks away from hiring banks, sources said.
A source claims the debt will be used to build up Macao Studio City. Last year Melco Crown’s co-chairman Lawrence Ho Yau Lung said the operator would invest USD 1.7 billion (MOP 13.6 billion) in the development of the Cotai project. He added that construction would commence in 2012 and the property may open in 2015.
But there is still no word on whether Studio City will have a casino. On Wednesday the secretary for Transport and Public Works, Lau Si Io, told lawmakers the introduction of a gaming space at the project has not yet been approved.
“And in order to make it a reality, of course, we would need the necessary gaming tables to make the project financially viable for us,” Ho acknowledged last August. The son of ailing tycoon Stanley Ho Hung Sun said he was confident of gaining authorities’ support.
“Before we even undertook investing in the Macao Studio City project, we had dialogue and communication with various levels of the Macau Government and they have been very supportive throughout the way,” Ho said.
Melco and the other five gaming operators all climbed in Hong Kong trading yesterday on expectations they will benefit from more mainland China visitors during the coming Lunar New Year holiday.
“Investors are expecting the footfall in Macau casinos to rise during the Chinese New Year,” said Edwin Fan, an analyst with Bank of China International in Hong Kong, quoted by Bloomberg.
But the holiday period will come too soon for new resort Sands Cotai Central, which will open “between March 22 and 27,” wrote HSBC Global Research’s Sean Monaghan in an investors note.
The analyst, quoted by Macau Business, believes the resort will account for 28 percent of Sands China’s earnings for 2013.