GGRAsia – Potential IPO for Studio City still on table: firm

Potential IPO for Studio City still on table: firm

Aug 21, 2018 Newsdesk Latest News, Macau, Top of the deck

Studio City International Holdings Ltd – the entity that controls the Studio City casino resort in Macau’s Cotai district – says its proposal for an initial public offering (IPO) in the United States is still actively being pursued.

Studio City International Holdings “has been continuing its preparations for the proposed IPO, which is expected to commence as market conditions permit and remains subject to the U.S. Securities and Exchange Commission declaring the registration statement effective,” the firm said in a press release issued on Monday.

The company had first confirmed plans for a potential IPO in August 2017.

The latest release did not made any reference to the dollar amount proposed to be raised through the operation.

Macau-based casino operator Melco Resorts and Entertainment Ltd has a stake of 60 percent in Studio City International Holdings, and it operates the Studio City property. The remaining 40 percent in Studio City International Holdings are held by New Cotai Holdings LLC, an entity controlled by United States-based investment firms Silver Point Capital LP and Oaktree Capital Management LP.

Melco Resorts is already listed in the U.S., namely on Nasdaq, in New York.

In a filing to the Hong Kong Stock Exchange also on Monday, Melco International Development Ltd – the controlling shareholder of Melco Resorts – highlighted that Studio City International Holdings’ proposed IPO was “subject to, among other things, the registration statement being declared effective by the U.S. Securities and Exchange Commission, approval of the relevant stock exchange in the United States, the final decisions of the board [of Melco International] and the board of directors of Studio City [International Holdings] and market conditions.”

Melco International added: “Accordingly, there is no assurance that the proposed spin-off will take place or as to when they may take place.”

Studio City – a US$3.2-billion, 2015 addition to Macau’s roster of mega resorts – includes a collaboration between Hollywood studio Warner Bros and American comic book publisher DC Comics regarding a virtual reality ride called ‘Batman Dark Flight’. The property also has a distinctive figure of eight Ferris wheel.

On a conference call with investment analysts last month, Melco Resorts management said it was currently in the process of developing the detailed design for Phase 2 expansion of Studio City, targeting to begin work in the second half this year.

The Macau government granted earlier this year a three-year extension on the development deadline for the public land concession where Studio City sits. The new deadline is July 24, 2021.

Management stated it was confident that Studio City had ample cash on hand, cash flow and debt capacity available to fund most of the anticipated capital expenditure for Phase 2, but it did not disclose a budget for such expansion.

The company also plans to launch new entertainment offerings at phase 1 of Studio City, including a new show in December, produced in collaboration with London-based entertainment architects Stufish, a company specialising in stadium concert stage designs and which created the concepts for the opening and closing ceremonies of the 2008 Beijing Olympics.

Last month, Melco Resorts opened an e-Sports venue branded “Macau EStadium” at Studio City. The new e-Sports facility is said to aim at promoting e-Sports events in Macau, including multi-player tournaments and live-streaming of e-Sports events taking place elsewhere.

Studio City generated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$73.2 million for the three months to June 30, versus US$80.7 million a year earlier.

Rolling chip volume at Studio City totalled US$6.1 billion for the second quarter of 2018, compared to US$4.7 billion in the prior-year period. Mass-market table games drop increased to US$814.3 million, compared with US$661.4 million in the second quarter of 2017.

The Studio City scheme has had a chequered history, with the project being mothballed for several years after an original set of investors failed to agree on funding in the aftermath of the global financial crisis that began in 2007.

In 2011, Melco Resorts paid US$360 million to take a 60-percent interest in the project, joining forces with a bloc of existing Studio City investors in the form of New Cotai.