Hong Kong denies Melco IPO

Sep 19, 2006 5:37 AM

A decision by the Hong Kong Stock Exchange to prohibit a gaming company run by the son of Macau gaming guru Stanley Ho from establishing an initial public offering (IPO) for its proposed casino in Macau caused regulators to wonder about the future of the subconsession license recently sold by Wynn Resorts Ltd. (WYNN).

Melco International Development Ltd., operated by Lawrence Ho, paid $160 million for its subconsession license while its partner, Australia’s Publishing & Broadcasting Ltd., run by legendary gaming whale Kerry Packer’s son James Packer, anted up $240 million. The remaining $500 million was financed through local banks.

The partnership planned to build a large-scale entertainment/gaming resort on 27 acres of land in Macau’s Cotai Strip, looking to challenge the Las Vegas-styled casinos being offered by Wynn Resorts, Las Vegas Sands Corp. (LVS) and eventually, MGM MIRAGE Inc. (MGM).

However, whether Melco PBL Entertainment could go forward without funds raised by the IPO was a matter being discussed by the principals. Melco said it planned to challenge the stock exchange’s rejection of the proposal while word out of Australia indicated that Packer felt he could go forward with the project without Ho’s company.

Meanwhile, Malaysian gaming company, Genting Bhd., whose efforts to gain access to casinos in Macau, and more recently Singapore, has decided to buy the 80% of Stanley Leisure Plc., Britain’s largest casino operator, for $1.19 billion.

And, Stanley Leisure’s principal competitor, London Clubs, is being sought by Harrah’s Entertainment Inc. (HET), another company that has failed to make inroads in the Asian markets.