IPO could raise up to $360M
Melco Entertainment is launching an IPO in Macau surrounding the company that owns its Studio City property. But in Manila, the public company that owns City of Dreams Manila may be taken private.
Studio City International Holdings Ltd. last week announced an initial public offering of American depositary shares. The entity, 60 percent owned by Melco Resorts & Entertainment, is the controlling unit of Melco’s Studio City integrated resort in Macau’s Cotai district.
Melco announced the IPO on October 9. The remaining 40 percent of Studio City is held by New Cotai Holdings LLC, an entity controlled by U.S.-based investment firms Silver Point Capital LP and Oaktree Capital Management LP.
GGRAsia reported that each of 28.75 million ADS represents four Class A ordinary shares of Studio City International Holdings. The price range for the offering “is currently estimated to be between US$10.50 and US$12.50 per ADS,” Melco stated. Based on that price range, the offering could generate US$302 million to US$360 million.
Studio City also gave its underwriters 30 days to buy an additional 4.3 million ADSs. “MCE Cotai (a wholly-owned subsidiary of Melco Resorts and currently the holder of 60 percent of Studio City) and certain affiliates of New Cotai (which currently holds the remaining 40 percent of Studio City), have indicated an interest in purchasing up to an aggregate of 25.55 million ADSs (representing approximately 88.9 percent of the total amount of ADSs being offered in the global offering),” stated the filing from Melco International.
Studio City will use the net proceeds of the offering “to acquire newly-issued shares of its subsidiary, MSC Cotai Ltd.,” the company announced. “In turn, MSC Cotai expects to apply the net proceeds it receives for the repayment of certain existing indebtedness.”
On a conference call with investment analysts in July, Melco said it’s planning the Phase II expansion of Studio City, which could begin before the end of the year. The US$3.2 billion resort opened in 2015. In February, the Macau government gave Melco an extension of Studio City’s development period by the Macau government through July 2021.
In the Philippines, MCO Investments, the unit of Melco Resorts & Entertainment that’s planning to privatize Melco Resorts Philippines, has announced it will move ahead with its planned to buy up 1.6 billion publicly held shares.
MRP first asked to be delisted from the Philippine Stock Exchange in September. Its tender offer was then planned for early October, then postponed after critics called the offer “unfair.” The company offered a consideration of up to PHP11.4 billion (US$25.9 million), or PHP7.25 per share.
Now Melco is prepared to pull the trigger on the sale. In an October 4 filing to the PSE, it said shareholders and investors of MRP “are entitled to express their views on what constitutes a ‘fair price’ under the tender offer,” but that “any further delay or disruption to the tender offer will essentially deprive MRP shareholders of their entitlements and rights to participate in the offer.”
According to Asia Gaming Brief, MCO now owns 72.77 percent of outstanding MRP shares. MCO said the voluntary delisting of MRP will enable it to consolidate its interests in MRP and to better support MRP’s future business plans.
Critics of the plan included Jervin S. De Celis, a trader at Timson Securities Inc., say Melco is lowballing shareholders with the tender price, which is at about half the 2013 initial price. “That’s an unfair price now that MRP is starting to earn money. The shareholders, who bought higher or held on to the IPO price are the losers here,” De Celis told Business Week.
Melco replied that the offer falls within the fair-value range calculated by FTI Consulting Philippines, a company accredited by both the PSE and the Securities and Exchange Commission.
