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What is Melco Crown Going To Do With $400 M?

Melco Crown has offered up $400M in ADS, at 3 shares per. The official word on plans for the cash is capex, capital, debt repayment or petty cash.

$400M is quite a bit more than what would would be needed to dot the 'i's and cross the 't's' at CoD, let alone buy office equipment and change the signage at Crown Taipa. WYNN raised about half that a month ago, raising a million eyebrows at a possible acquisition of Bellagio.

But what are they really going to do with that loot? Starter funds to purchase a chunk of Las Vegas Sands' stalled pipeline? Cash to be spent relinquishing MGM Mirage of MGM Grand Macau? Use it to pay down debt so they can raise even more debt after City of Dreams opens?

One thing is for sure, the gigantic boomerang that is Melco Crown is has just about turned the bend and is on the precipice of zooming right at our collected skulls. This could get very interesting.

City of Dreams opens in approximately three months.


Comments & Discussion:

Hi Chuck,

Any news on WHY Crown Taipa are changing their name to Altira?


Officially, not yet. Unofficial/Officially : see previous post and the post before that. It's happening.

Sorry, I missed the "WHY". I don't have any official reasons why. My guess is that is purely related to branding and a change in focus for the property after CoD opens. There is a Crown at City of Dreams, and having two Crowns within two miles of each other (separated by a hill) dilutes and confuses each.

I'll submit that Crown Taipa has served its purpose - snaking off the top level of high rollers until Melco Crown has finished CoD. Now, the VIPs will be moving to CoD, with a handful of scragglers and other privacy concerned players staying at Altira. I'll venture that Altira will be come a high market hotel/casino/resort, unshackled from the rigors of maintaining the VIP play, only.

According to their 3Q 2008 conference call, the rebranding is being done to differentiate between Crown Taipa, a junket-focused property, and Crown@COD, which is a direct (non-junket) VIP property.

It is really just an effort to divide their junket and non-junket VIP business so that they can get the right customers at the right properties.

That's also why AMAX will not be operating at COD.

As to the $400mm, I suppose they want to raise cash to complete the 2nd phase of COD?

jcd - i was told by the melco folks that amax was going to work at both properties. of course this was before their pr blackout, so things may - and probably have - changed.

if the were going to fund CoD II with it, they probably would've been required to state as such in regulatory filings. i'm certainly no expert on the business end of things so i could be completely wrong here. also, l-ho has said that they've got their eyeballs on distressed assets and will be looking at making some purchases after CoD opens.

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