Difference of opinions on fate of Macau Studio City project

Sep 17, 2012 6:26 PM

If investors in Melco Crown Entertainment Ltd. (MPEL) are buying the company’s stock because they believe it will have a casino included in the Studio City project on Macau’s Cotai Strip, they must make a crucial decision:

Should they believe CEO Lawrence Ho who insists Studio City will open on schedule in 2015 with a casino, or

Should they take the word of Francis Tam, Macau’s Secretary for Finance and Economy, who told the media on Friday the government hasn’t changed its position, that being that only applications filed before 2008 would be considered for licensing.

That, presumably, would leave Melco Crown without a Studio City casino.

As reported in the Macau Daily Times, Ho spoke to the media on Friday saying the company had received approval for the construction of a hotel. He also confirmed that the company had already applied for a gaming business to be added to the original project. He expressed confidence there would be positive feedback from the gaming regulators.

But Tam was adamant that government’s goal was to limit the number of gaming tables in Macau to below 5,500 by 2013, and after that, the growth rate would be contained at an average of 3 percent per year. And the gaming plans do not include Studio City.

The conflicting opinions have been constant since Melco applied for a license in 2008. Both government officials and company representatives have expressed different opinions on just what is going to happen.

As recently as last July, Lau Si Io, the secretary for Macau’s Transport and Public Works, confirmed there would be no gaming facility at Studio City.

That’s the dilemma for investors. MPEL shares have been trading in the $12-14 range in recent weeks.

Ray Poirier is the longtime executive editor at GamingToday.

Contact Ray at Ray­[email protected].

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