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Galaxy may announce plans to expand casino in Cotai

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Galaxy Entertainment Group Ltd., the casino operator, may announce the second phase of development of its Cotai casino in Macau tomorrow, according an investment bank that specializes in the gambling industry.
The company has invited journalists in an e-mail to a press conference tomorrow in Hong Kong which will be attended by Chairman Lui Che Woo and Vice Chairman Francis Lui. The invitation didn’t disclose the details of the event. Peter Caveny, vice president of Galaxy’s investor relations, declined to comment further.
“We expect Galaxy to announce the Galaxy Macau Phase II development on Thursday,” Grant Govertsen, managing partner of Union Gaming Group, said in an e-mail yesterday. “We would expect the project cost of Phase II to be in the neighborhood of the first phase, or up to HKD16 billion (USD2 billion).” Union Gaming Group focuses exclusively on the gaming industry and provides global equity research and related market and economic analytics.
Galaxy shares slid yesterday after a shareholder offered a stake of as much as HKD1.1 billion ($141.7 million) in the company. The institutional investor, whose identity wasn’t disclosed, is offering about 50 million shares at HKD21.70 to HKD21.90 each, according to the terms for the transaction obtained by Bloomberg News. Shares dropped 1.8 percent to HKD22.30.
Galaxy opened the USD1.9 billion, 450-table Galaxy Macau resort in May on the Cotai Strip, modeled on the Las Vegas Strip. The project helped more than triple its profit in 2011. It lifted the company’s market share to about 17 percent, Chairman Lui Che-woo said in June.

No Dividend

“We believe the pending announcement and the capital needs of Galaxy Macau Phase II is the primary reason as to why Galaxy Entertainment hasn’t instituted a dividend,” said Govertsen, who was previously an analyst on the North American equity research team at Deutsche Bank.
The Macau unit of Sheldon Adelson’s Las Vegas Sands Corp., the world’s biggest casino company by market value, opened the Cotai Central this month on the Cotai Strip, where it already has the island’s largest resort, the Venetian Macau.
Macau is the world’s biggest casino hub, with USD34 billion in gambling revenue last year, almost six times the USD6.07 billion of Las Vegas, according to figures provided by the Macau and Nevada authorities.

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