GGRAsia – Budget boost for Melco Crown’s Studio City

Budget boost for Melco Crown’s Studio City

Jun 03, 2014 Newsdesk Latest News, Macau, Top of the deck

The budget for Studio City casino resort in Cotai has been raised by US$300 million, to US$2.3 billion, an increase of 15 percent, majority owner Melco Crown Entertainment Ltd announced.

The figure includes construction and fit out costs, design and consultant fees.

The announcement was made on Tuesday in a filing to the U.S. Securities and Exchange Commission. Melco Crown did not provide a reason for the budget increase.

Studio City is the latest casino resort under development in Cotai to have its construction budget revised upwards. Hong Kong-listed MGM China Holdings Ltd boosted the budget for its Cotai project in February this year, to US$2.9 billion from US$2.6 billion, citing rising labour costs. Also in February, SJM Holdings Ltd raised the construction budget for its Lisboa Palace in Cotai to HK$30 billion from HK$25 billion because of higher construction and labour costs.

Last year, Galaxy Entertainment Group Ltd increased the budget for the second phase of its Cotai casino-resort to HK$19.6 billion (US$2.5 billion) from HK$16 billion.

The shareholders of Studio City International Holdings Ltd, the developer of Studio City, have agreed to make available additional equity on a pro rata basis to partially fund such budget increase, the statement said. The remaining amount “will be paid for out of previously funded equity commitments from such shareholders,” the document added.

Melco Crown has a stake of 60 percent in Studio City International Holdings. New Cotai LLC, controlled by funds managed by United States investment firms Silver Point Capital LP and Oaktree Capital Management LP, owns the remaining 40 percent.

Lawrence Ho Yau Lung (pictured at a recent event at City of Dreams, Cotai), co-chairman and chief executive of Melco Crown, said in a statement that the property “remains firmly on track” to open in mid-2015.

“Studio City’s prime location directly adjacent to the Lotus Bridge immigration border and proposed light rail stop is one of the property’s key competitive advantages given the anticipated growth and widespread development plan for Hengqin Island,” Mr Ho added.