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47


Crown’s gamble T


Melco Crown acquires a majority stake in the stalled Macau Studio City project but there’s no word from the government if the property includes a casino


he stalled, shuttered construction works on Macau Stu- dio City in Cotai are set to resume after gaming operator Melco Crown acquired a majority stake in the project.


What is unclear however, is what form the property will take. Melco Crown announced last month the signing of an


agreement to acquire a 60-percent share in the development for US$260 million (MOP2.1 billion), which had previously belonged to Hong Kong-listed eSun Holdings Limited and Singapore government-linked developer CapitalLand. Melco Crown and New Cotai Holdings, LLC will now


jointly develop the property. The latter is an entity control- led by funds managed by Silver Point Capital, L.P. and Oak- tree Capital Management, who received US$100 million from Melco Crown as part of the deal. The announcement sees the resolution of a long-running,


bitter dispute among the project’s  rst set of partners that had played out in Hong Kong’s courtrooms. The original partner- ship began to fall apart after being unable to secure  nancing, with relations deteriorating from 2008 onwards. The delays led to intervention by the Macau government


last year. Local authorities demanded an explanation for why was the project had stalled. Of cials threatened to take back the land if there was no breakthrough.


Bigger footprint Lawrence Ho, Melco Crown’s co-chairman and chief execu- tive of cer says the project’s location is a “tremendous com- petitive advantage, adjacent to the Lotus Bridge and a key stop” on the planned light rail system. “The proposed acquisition of a majority stake in the Studio


City project provides a unique opportunity for Melco Crown to meaningfully increase its footprint in Macau and generate incremental value for shareholders,” Mr Ho announced.


The big question is whether gaming will be allowed at


the site. Mr Ho says Studio City will open with 300 to 400 gambling tables and 1,200 slot machines, pending government approval. And that may present a problem. The original contract issued by the government and inked


in 2001 said the property should include  lm production fa- cilities, of ces, restaurants and even housing, but no gaming area was authorised. In 2007, the developers submitted modi cations to their


land grant that would include a casino. They also submitted a request to increase the developable gross  oor area of the site to about 560,000 square metres. Melco Crown was offered a deal to operate the gaming  oors. The Macau government has never made public a revised


land grant for Studio City, namely whether casino facilities were approved. When pushed on the issue, secretary for trans- port and public works Lau Si Io has kept quiet, although he has stressed that the development of  lm production facilities must be a major component of the project. Mr Ho doesn’t seem worried about the government ap-


proval of the revised plans for the site. “We wouldn’t have done this [deal] without the Macau government’s blessing,” he says. Melco Crown expects Studio City to cost another US$1.7


billion to complete. The property will have about 2,000 ho- tel rooms, 18,500 square metres of retail space and entertain- ment, according to Mr Ho. The new, tentative deadline for the opening is the  rst half


of 2015. Initially, 2009 was the target. How the  nal Studio City turns out will be much different


from the 2007 version, which included 1,900 hotel rooms, a Playboy mansion, a huge shopping mall managed by US retail giant Taubman and a 4,000-seat arena. The delays have since scared off Playboy and Taubman.


JULY 2011


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