Ho’s Melco To Go Public in U.S.
The Ho clan is striking back. The company run by the son of casino mogul Stanley Ho is looking to raise more than $1 billion to get a gaming license and build a casino of its own.
This will net the company up to $954 million. An option to sell a further 7.95 million shares should the first sale be successful will take place, putting the overall take from the stock sales at more than $1 billion.
According to Jonathan Galaviz, a partner at Las Vegas-based gaming and leisure consulting company Globalysis Ltd, in a statement to Marketwatch, this financial move is a sort of coming out party for Melco. “This looks to be a part of a strategy to expose the venture to the larger global gaming market,” said Galviz.
Casino mogul Stanley Ho, who once had a 40-year stranglehold on the market as Macau’s sole casino owner, now sees his grip on the market is gone. In 2002, the region’s government sold additional gaming rights to companies such as Las Vegas Sands and Wynn Corporation. While the market is exploding as bigger and better casino resorts open, less people are visiting his venerable gaming establishments.
According to the South China Morning Post, one third of his gaming halls are on the brink of bankruptcy. Ho currently owns 16 of the 22 casinos. Ho operates the casinos through Socieda de Jogos de Macau SA.
Melco PBL has gotten in to the Macau market by getting its license from Steve Wynn, one of America’s most renowned casino operators. He is credited with inventing the modern Las Vegas mega-resort when he introduced the Mirage in 1989.
Currently Ho operates a half dozen Mocha Clubs with just 1,000 slot machines. Next year he is looking to open the Crown Macau Hotel Casino to cater to serious gamblers in Macau and this new deal will help his company fund the City of Dreams, which will open on the Cotai strip in phases beginning in late 2008. A third casino plan is in the very early stages and could open in 2009. Additionally, the company has a conditional agreement to develop a hotel and casino on the shoreline of the Macau Peninsula for day-trip gamblers.
The Crown Macau casino will open in the second quarter of 2007 at a cost of $512.6 million and include 220 table games, which are preferred by gamblers in Macau over slot machines. The City of Dreams is expected to cost $2.1 billion and have 450 table games.
Though Macau is part of China it is a a former Portuguese colony and therefore has looser rules and regulations like Hong Kong. It is the only place in the entire country where casino gaming is legal. The protectorate is rapidly expanding its gaming market and in October took in more money than the world famous Las Vegas Strip. According to a forecast by Globalysis, the destination is predicted to top more than $8 billion on 2007.
Visitor arrivals were 1.99 million in October, 20 percent higher than a year earlier. Macau had a total of 18.71 million visitors last year, compared to 16.67 million in 2004. Visitor arrivals rose 40% in 2004, thanks in part to a relaxation of China's travel rules that allowed mainland Chinese to travel more easily to Macau. In 2005, visitors from the mainland accounted for 56% of the total, or 10.46 million.
"Macau will continue its transformation into a holistic leisure tourism destination in 2007,” said Galaviz. “We believe that Macau's casino gaming revenue in 2007 will be driven by substantial growth in non-casino amenities such as new convention center venues and innovative entertainment options incorporated into Macau's fresh Las Vegas style integrated resorts."
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