21-10-2015, 06:37 AM
James Packer's new Studio City casino in Macau gets fewer tables than hoped for
DateOctober 21, 2015 - 8:16AM
[Image: 1431915414646.png]
Perry Williams
Senior Reporter
The Macau casino operator part owned by James Packer's Crown Resorts will seek talks with lenders on the $US3.2 billion ($4.4 billion) Studio City casino after authorities approved just 250 gaming tables for the complex, dashing hopes it would meet a 400-table commitment.
Melco Crown Entertainment, 34 per cent owned by Crown, can place 200 tables and 1233 poker machines on its gaming floor for the opening of the casino on October 27 with a further 50 gaming tables approved from January 2016.
Melco's 250 table allotment is superior to rival Galaxy Entertainment Group's 150 allocation for its Galaxy Macau Phase 2 and Broadway Macau casinos which opened in May.
But it falls short of a key part of the debt dealcovering Studio City with the $US1.4 billion loan including a covenant that states the casino needs a minimum of 400 tables.
"Following the table allocation confirmation, Studio City intends to proactively engage the lenders under its senior credit facilities to discuss proposed amendments to the terms of its loan documentation to reflect the number of tables allocated," Melco said in a statement on Wednesday.
Studio City International Holdings is 60 per cent owned by Melco, with the balance held by hedge funds Silver Point Capital and Oaktree Capital Management through a group called New Cotai.
If lenders baulk at Melco's proposed amendment to the covenant, one option could include a $US1 billion deal with the hedge funds that own 40 per cent of Studio City, in a bid to improve the economics of the resort.
Analysts point out that if Melco were to move tables from its other Macau casinos, City of Dreams or Altira to Studio City, it would reduce its share of the takings. However, if it owned Studio City outright, it would have more freedom to move tables between its properties.
While Melco missed its 400-table target, it credited Macau authorities for recognising the effort and investment it had placed into its vast entertainment offering at the complex.
It aims to attract a more family-friendly crowd with a mix of Warner Brothers-themed rides, a Batman flight simulator and Asia's highest ferris wheel set between two art deco hotel towers.
The Hollywood-themed attractions may help Macau mirror the reinvention of Las Vegas where only one-third of the city's revenues are now derived from casinos.
"We thank the Macau government for its consideration of our application and approval of gaming tables and machines for Studio City," said Melco's chief executive Lawrence Ho. "We are confident that Studio City's offering of cinematically-themed entertainment, retail, food and beverage and accommodation options will contribute meaningfully to the economic and employment diversification of Macau."
Casino veteran and billionaire Steve Wynn received a sharp rebuke from Macau gaming officials on Monday after he criticised the city state's annual cap on table allocations.
Mr Wynn, who plans to open a new Macau casino in March 2016, said it was "preposterous" Mr Packer and Melco Crown would only discover their table limit days before the casino opened.
Macau authorities called Wynn Resorts representatives to a meeting on Monday and reiterated they would "strictly follow" the principle of allowing a year-on-year average growth rate of no more than three percent in gaming tables before the year 2023.
DateOctober 21, 2015 - 8:16AM
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[Image: 1431915414646.png]
Perry Williams
Senior Reporter
[Image: 1445375808787.jpg]
James Packer's latest Macau casino, Studio City, faces a tough entry to the market after receiving a smaller than expected number of gaming tables from regulators. Photo: FDC
The Macau casino operator part owned by James Packer's Crown Resorts will seek talks with lenders on the $US3.2 billion ($4.4 billion) Studio City casino after authorities approved just 250 gaming tables for the complex, dashing hopes it would meet a 400-table commitment.
Melco Crown Entertainment, 34 per cent owned by Crown, can place 200 tables and 1233 poker machines on its gaming floor for the opening of the casino on October 27 with a further 50 gaming tables approved from January 2016.
Melco's 250 table allotment is superior to rival Galaxy Entertainment Group's 150 allocation for its Galaxy Macau Phase 2 and Broadway Macau casinos which opened in May.
[Image: 1445375808787.jpg]
James Packer (right) and his business partner Lawrence Ho (left). Photo: Graham Uden
But it falls short of a key part of the debt dealcovering Studio City with the $US1.4 billion loan including a covenant that states the casino needs a minimum of 400 tables.
"Following the table allocation confirmation, Studio City intends to proactively engage the lenders under its senior credit facilities to discuss proposed amendments to the terms of its loan documentation to reflect the number of tables allocated," Melco said in a statement on Wednesday.
Studio City International Holdings is 60 per cent owned by Melco, with the balance held by hedge funds Silver Point Capital and Oaktree Capital Management through a group called New Cotai.
If lenders baulk at Melco's proposed amendment to the covenant, one option could include a $US1 billion deal with the hedge funds that own 40 per cent of Studio City, in a bid to improve the economics of the resort.
Analysts point out that if Melco were to move tables from its other Macau casinos, City of Dreams or Altira to Studio City, it would reduce its share of the takings. However, if it owned Studio City outright, it would have more freedom to move tables between its properties.
While Melco missed its 400-table target, it credited Macau authorities for recognising the effort and investment it had placed into its vast entertainment offering at the complex.
It aims to attract a more family-friendly crowd with a mix of Warner Brothers-themed rides, a Batman flight simulator and Asia's highest ferris wheel set between two art deco hotel towers.
The Hollywood-themed attractions may help Macau mirror the reinvention of Las Vegas where only one-third of the city's revenues are now derived from casinos.
"We thank the Macau government for its consideration of our application and approval of gaming tables and machines for Studio City," said Melco's chief executive Lawrence Ho. "We are confident that Studio City's offering of cinematically-themed entertainment, retail, food and beverage and accommodation options will contribute meaningfully to the economic and employment diversification of Macau."
Casino veteran and billionaire Steve Wynn received a sharp rebuke from Macau gaming officials on Monday after he criticised the city state's annual cap on table allocations.
Mr Wynn, who plans to open a new Macau casino in March 2016, said it was "preposterous" Mr Packer and Melco Crown would only discover their table limit days before the casino opened.
Macau authorities called Wynn Resorts representatives to a meeting on Monday and reiterated they would "strictly follow" the principle of allowing a year-on-year average growth rate of no more than three percent in gaming tables before the year 2023.