Melco Crown (Philippines) Resorts Corp announced on Wednesday a massive budget increase for the City of Dreams Manila casino resort.
The company said the total budget for the project up to the time of opening would increase from US$680 million to approximately US$832 million. It did not provide a reason for the 22-percent hike. The project is officially scheduled to open “in 2014″. Industry sources spoken to by GRRAsia indicated that the scheme had faced cost pressures and challenges in recruiting high-quality staff.
Bloomberg News reported on Wednesday afternoon that Melco Crown (Philippines) Resorts Corp is seeking to raise as much as US$129 million selling shares following the budget hike announcement.
It will offer as many as 485.2 million shares at 11.30 pesos to 11.70 pesos each, according to terms for the deal obtained by Bloomberg.
Trading of Melco Crown Philippines shares were suspended from 9am on Wednesday at the company’s request. The price range represents a 3.9 percent to 7.2 percent discount to its closing price of 12.18 pesos on Tuesday. The company said it seeks to resume trading in the shares on Thursday.
In October last year, the Hong Kong-based parent Melco Crown Entertainment Ltd said it would increase the budget for the Manila venture by 10 percent to US$680 million.
Armin Santos, executive vice president for integrated resorts at Melco Crown’s local partner Belle Corp, confirmed to GGRAsia during the Global Gaming Expo (G2E) Asia 2014 last month that the partners’ aim is to open City of Dreams Manila in October to coincide with China’s Golden Week holiday. Belle is controlled by SM Group, headed by Henry Sy, patriarch of the Philippines’ richest family. The property will be operated by Melco Crown (Philippines).
The budget increase was approved on Wednesday at a special meeting of the board of directors, according to a company filing to the Manila bourse. Directors also approved a top-up placement of an undisclosed amount of shares to raise funds.
The announcement was made after the Philippine Stock Exchange suspended trading of Melco Crown (Philippines) shares at a request of the company. Trading will be resumed on Thursday.
According to previous fillings, the casino resort currently has an allotment from the country’s regulator and licensor, the Philippine Amusement and Gaming Corp (Pagcor), for 365 gaming tables, 1,680 slot machines and 1,680 electronic table games.
Melco Crown (Philippines) announced earlier this month a hotel management agreement for a Hyatt-branded hotel at Dreams Manila. The hotel will feature 365 guestrooms, two food and beverage areas, a fitness centre, VIP lounge and outdoor swimming pool, the company said.
The gaming operator had previously stated the six-tower Manila property would also have an approximately 260-room Crown Towers hotel, using the branding of Crown Resorts Ltd, one of two controlling shareholders of parent Melco Crown.
City of Dreams Manila will also have a Nobu Hotel – the first in Asia – taking advantage of the brand recognition globally of Japanese chef Nobu Matsuhisa and Nobu’s brand ambassador, Oscar-winning actor Robert De Niro, who is also a shareholder in Nobu Hospitality LLC according to a company announcement in March.
(Updated at 9.30PM)
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Analyst at Roth Capital Partners