GGRAsia – Melco stake in Studio City slightly up after share offer

Melco stake in Studio City slightly up after share offer

Aug 03, 2020 Newsdesk Latest News, Macau, Top of the deck

The shareholding structure of Studio City International Holdings Ltd, the controlling entity for the Studio City casino resort (pictured) in Macau, has remained largely unchanged amid a series of company private share offers to existing shareholders. The private offers allowed Studio City International to raise gross proceeds of US$500 million, to be used for the development of phase two of its casino resort, and for general corporate purposes.

The firm’s largest shareholder, Macau gaming licensee Melco Resorts and Entertainment Ltd, agreed on Friday to spend a total of US$280.8 million to acquire around 72.2 million Studio City International Class A shares through a private offer. Based on the operation, Melco Resorts is to increase its stake in Studio City International to 54.7 percent from 54.1 percent.

The information was disclosed in a filing issued on Monday by Melco International Development Ltd, the parent of Melco Resorts.

According to the document, Studio City International minority shareholder New Cotai LLC also roughly maintained its relative position in the company, by agreeing to acquire more than 49.1 million Class A shares. New Cotai is to spend almost US$191.1 million in the operation, which will see its stake in Studio City International increase to approximately 37.2 percent from 36.8 percent.

New Cotai is backed by U.S.-based investment funds Silver Point Capital LP and Oaktree Capital Group LP.

The subscription price per Class A share was, both for Melco Resorts and New Cotai, US$3.89. Both offers are expected to be concluded by Friday.

Melco Resorts had previously announced it woul purchase all shares offered to it under the share offer operation by Studio City International. Melco Resorts said at the time it would also seek to acquire “the maximum number of unsubscribed securities available for purchase by it.”

Casino developer and operator Melco Resorts runs the gaming operations at the Studio City property. Melco Resorts is controlled by gaming entrepreneur Lawrence Ho Yau Lung, who also heads Melco International.

The Studio City property generated negative adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$9.4 million in the first quarter of 2020, compared with positive EBITDA of US$96.4 million in the prior-year period. “The year-over-year decrease in adjusted EBITDA [at the property] was primarily a result of softer performance in all gaming segments,” according to results disclosed in May by Melco Resorts.