Melco International Development has entered into a joint venture investment agreement with its partner in Cyprus, CPZ, that will see its stake in their integrated resort project increase to 75%.
The agreement lays out the details for the development and operation of an integrated casino resort in Limassol and up to four satellite casino premises in Cyprus via recently established project holding company ICR Holdings Ltd, with Melco describing it as a unique and attractive business opportunity to “develop and operate integrated casino resorts in Cyprus … consistent with the Melco Group’s broader objective of establishing itself as a global entertainment and gaming operator.”
Included in the joint venture investment agreement is a subscription agreement between CPZ and ICR Holdings relating to the subscription for shares by Melco and CPZ in ICR Holdings, which will see Melco acquire an additional 4.26% of the equity in ICR Holdings, taking its stake from 70.74% to 75%. Likewise, CPZ’s equity will fall from 29.26% to 25%.
Melco will pay a total of €160 million in cash for the issue of the new shares in ICR Holdings with the first installment of €25 million to be paid upon completion of the subscription agreement.
“The remaining amount is payable as required for the development of the project, in accordance with calls made by the board of directors of ICR Holdings,” Melco said.
Under the subscription agreement, CPZ has agreed to contribute the real estate on which the resort will be developed.
The joint venture investment agreement also includes a shareholders’ agreement which stipulates that the board of ICR Holdings will have a maximum of six directors, of which Melco has the right to appoint four and CPZ one. Melco will also retain the right to appoint the Chairman for as long as it holds at least 10% of the issued share capital of the company and to appoint one extra director for as long as it is responsible for the management of the casino.
Under the shareholders agreement, Melco International’s 51.22%-owned subsidiary Melco Resorts & Entertainment Limited – which operates City of Dreams, Studio City and Altira in Macau as well as City of Dreams Manila – will be responsible for the management of the project as well as “development management services in relation to the design, construction and development process for IR, pre-opening and related services, corporate management services and the provision of intellectual property and proprietary systems.”