Pbl Debt To Make City Of Dreams A Reality

Sydney Morning Herald

Friday September 7, 2007

Miriam Steffens with agencies

PUBLISHING & BROADCASTING's gambling venture in Macau has hinted it will seek to tap debt markets again after the global credit crunch forced it to reduce a planned $US2.75 billion ($3.3 billion) capital raising for its ambitious City of Dreams casino.

Melco PBL Entertainment, which is run by James Packer's PBL and Lawrence Ho, son of the Macau casino tycoon Stanley Ho, managed to raise $US1.75 billion from six international lenders to finance construction of the casino, which is expected to open in March 2009. Should that not be enough, PBL and Lawrence Ho's Melco have each committed to contribute $US125 million to complete the project.

"The facilities provide Melco PBL Gaming with financing sufficient to meet the projected cost of constructing and developing the first phase of City of Dreams," including its casino and retail space and two hotels, the casino venture said yesterday.

But its plans for the flagship casino also included an apartment hotel, which would cost about $US353 million.

PBL Melco said it would monitor fund-raising conditions in the market with a view to securing the appropriate additional financing for the apartment hotel and a third casino project on the Macau peninsula.

Mr Packer's and Mr Ho's venture needs about $US2.75 billion to complete all its projects in the next three to four years. They want to run three casinos in the former Portuguese colony, which last year overtook Las Vegas as the world's biggest casino market.

The first casino, the $US500 million Crown Macau, opened in May, but has been fully operational for only about a month.

The underwater-themed City of Dreams casino will house more than 450 gaming tables, about 3000 pokies, more than 2000 hotel rooms, a shopping mall and a 1700-seat theatre.

Macau's gambling revenue for the year to date is up 49 per cent from last year and is on track to reach $US10 billion in 2007, the broker Goldman Sachs JBWere said yesterday.

But Melco PBL's NASDAQ-listed shares have fallen 36 per cent in the same period, with the City of Dreams financing one of the issues that weighed on the share price, the broker said.

Most of the $US1.5 billion raised this week will come in form of a seven-year loan facility and be used to finance the City of Dreams casino and entertainment project.

The remaining $US250 million will form a five-year revolving credit facility, available for cost overruns at the project and other financing needs.

The banks providing the facilities, which are non-recourse to PBL, were ANZ Bank, Banc of America, Deutsche Bank, Barclays Capital, Citigroup and UBS.

© 2007 Sydney Morning Herald

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