Pbl, On A Roll In Macau, Plans Us Float

Sydney Morning Herald

Thursday May 25, 2006

Colin Kruger

PUBLISHING & Broadcasting Ltd and its Asian partner, Melco International, are planning to cash in on their investment in Macau's white-hot gambling market.

Their joint venture would be publicly listed in the US later this year, company sources confirmed yesterday.

The partners are planning to raise about $US1 billion ($1.3 billion) with a public listing on Nasdaq, which is expected to value the joint venture at about $US5 billion.

It is understood that the money will be earmarked for new projects elsewhere in Asia.

A float will depend on the partners receiving the Macau Government's approval for the sub-concession they are acquiring for $US900 million from Wynn Resorts. The sub-concession allows the partners to own and operate an unlimited number of casinos in Macau. Approval is expected by July.

The partners aim to cash in on strong demand from US investors for any stock with exposure to the Macau market. Gambling turnover in Macau is forecast to overtake that of Las Vegas this year.

Australian markets have been more reserved in their valuations of PBL's Macau interests.

"In Australia people are being a bit more sceptical," said an analyst who did not wish to be named.

According to a report in The Australian Financial Review yesterday, Credit Suisse, UBS and Citigroup are helping the partners with the public offering.

The float will include the sub-concession and two casinos the partners are building in Macau, with plans for a third. The latter will be built on land the partners acquired in the heart of Macau's gambling strip last week for $250 million.

The timing of a float will be important for a number of reasons.

Six casinos are expected to open in Macau this year alone, and another four next year, including PBL and Melco's Crown Macau.

Analysts and some Macau operators are already voicing concerns about how the extra supply will affect the profitability of all the casino operators.

Another concern is that in 2009, the Macau authorities will decide whether to offer more concessions to new entrants that want to set up casinos in the former Portuguese colony.

Time is also money for PBL and Melco's sub-concession, which expires in 2022.

At least one analyst was not surprised at PBL's attempt to cash in its Macau interests in much the same way it did with eCorp during the tech boom.

"PBL being PBL, management is unlikely to sit back and not seek to monetise this premium in either Hong Kong or the US," Citigroup said last week. The broker values PBL's share of the venture at $2.7 billion, which it said was "no stretch" based on Melco's share price at the time.

PBL shares jumped 5.4 per cent yesterday, finishing 97c higher at $18.99, after reports of the float surfaced.

© 2006 Sydney Morning Herald

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