By Kate O’Keeffe
Of DOW JONES NEWSWIRES
HONG KONG (Dow Jones)–Nasdaq-listed Melco Crown Entertainment Ltd. (MPEL) said Thursday it has applied to the Hong Kong Stock Exchange to launch a dual listing in the Chinese territory in conjunction with a potential global share offering, becoming the latest Macau casino operator to look to Hong Kong to raise capital.
Lawrence Ho, Melco Crown chief executive and son of Macau gambling scion Stanley Ho, said in a statement that the proposed dual listing would put the company on par with its competitors who all have Hong Kong listings and that it would also “provide our existing shareholders with much enhanced liquidity, while providing us with access to an additional source of capital.” The plan would also let local investors directly access investment opportunities in Melco Crown, he added. He didn’t provide a timeline for any potential listing, which would require regulatory and shareholder approval.
The plan follows Melco Crown’s June signing of a US$360 million deal to gain control over a large-scale casino-resort development project in Macau called Macau Studio City, a move that could significantly boost the joint venture’s foothold in the world’s biggest gambling market. The deal primes Melco Crown backers Ho and James Packer, the son of late Australian casino-and-media magnate Kerry Packer, to open their second casino project in Macau’s Cotai area, a formerly barren strip of landfill that has become the focus of billions of dollars worth of investments from casino operators including Las Vegas Sands Corp. (LVS).
Sterne Agee analyst David Bain wrote in a Thursday report he thinks the listing proposal is aimed at providing access to capital for development projects such as Macau Studio City, increasing share liquidity and adding a “potential valuation hedge should the U.S. stock market experience a future broad-based decline more so than its Hong Kong counterpart.” He noted the Hong Kong-listed units of Las Vegas Sands and Wynn Resorts Ltd. (WYNN) both sell at valuation premiums relative to their U.S. capital market valuations.
A Melco Crown listing would follow the June Hong Kong initial public offering of MGM China Holdings Ltd. (2282.HK), a casino joint venture between MGM Resorts International (MGM) and Stanley Ho’s daughter Pansy which raised US$1.5 billion before over-allotment options and priced at the top of the offering’s price range, reflecting investor optimism about Macau’s booming gambling industry.
Melco Crown is approximately one-third owned by Hong Kong-listed Melco International Development Ltd. (0200.HK) and accounts for about 90% of the latter’s net asset value.
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