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MANILA, Philippines - The Philippine unit of Macau firm Melco Crown Entertainment Ltd. is laying the groundwork for equity financing options for its $1.3 billion casino-resort project with Henry Sy's Belle Corp.
Manchester International Holdings Unlimited, a property and pharmaceutical firm that also serves as a backdoor listing vehicle for Melco, approved on Tuesday, February 19, the equity offering of about one billion shares.
In a disclosure to the stock exchange, Manchester said it will hike the authorized capital stock to P5.9 billion from P900 million.
Melco is expected to subscribe to up to 2.846 billion shares at P1 per share through its unit MCE (Philippines) Investments Limited. At its current share price, one billion shares of Melco may raise P15 billion.
"The proceeds of the subscription to new shares of the corporation will be used to pay for the acquisition of assets, including but not limited to the purchase from MCE (Philippines) Investments Limited of all of the outstanding shares in MCE Holdings (Philippines) Corporation," the company said.
There is a provision for an overallotment of 20% of the total offer shares.
Aside from the capital hike, Manchester shareholders also approved changes to the company's articles of incorporation to facilitate Melco's entry.
The changes include altering the company's name to Melco Crown (Philippines) Resorts Corpn. Shareholders also voted for declassification of shares into a single class off common shares and the denial of pre-emptive rights.
Melco and Henry Sy's Belle Corp. entered into a joint venture agreement in October last year for the development of the $1.3 billion Belle Grande Manila, which is expected to open in the first half of 2014.
The deal stipulated that both parties would be named as co-licensees and owners of the complex. The investment contributions for the project will be split equally between the two firms.
Both parties are expected to make an initial investment of $650 million. Belle Corp. will be contributing land and building structures worth $325 million.
Melco Crown, on the other hand, will contribute entertainment facilities, gaming equipment, fit out, furniture, inventory and supplies also valued at $325 million. Both companies will cover the remaining $350 million investment through contributions of $175 million each.
Belle Grande Manila is expected to have 250,000 square meters of gross floor area. This includes 17,000 square meters allotted for gaming and over 20,000 square meters for retail and restaurant facilities. The facility is expected to house over 800 hotel rooms. - Rappler.com
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