Tuesday, Sept. 14, 2004 | 9:16 a.m.
BLOOMBERG NEWS
MACAU -- Melco International Development Ltd., a Hong Kong-listed company controlled by Macau gambling tycoon Stanley Ho and his son, will buy a one-half stake in a planned hotel and casino from Ho for HK$100 million ($13 million).
Melco, which operates an investment bank and develops real estate, said it will pay for the purchase with a five-year bond convertible into as many as 25 million Melco shares, equal to a 6.6 percent stake in the company, at HK$4 each. Melco will pay annual interest of 4 percent on the bond.
"By entering into the agreement, the group can participate in the development of the hotel and subsequently manage the electronic gaming machine lounge," Melco said in a statement to the Hong Kong stock exchange.
Ho has been expanding his business in Macau, the only place in China where casino gambling is legal, in response to increased competition after the former Portuguese colony ended his 42-year monopoly in 2002, awarding licenses to Las Vegas billionaires Steve Wynn and Sheldon Adelson.
Melco will buy the 50 percent stake in the project from Sociedade de Turismo e Diversoes de Macau, a closely held company through which Ho owns his gambling interests. Melco didn't identify the owner of the other half of the project.
The HK$100 million Melco plans to invest will pay for half the cost of land for the hotel in Macau. The whole project will cost about HK$1.5 billion and will be financed by some combination of borrowing or new share sales, Melco said. The company didn't say when the hotel will be completed.
Ho, chairman of Melco, and his son Lawrence Ho, the managing director, will abstain from voting at a shareholders' meeting that will called to vote on the proposed purchase and bond sale.
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