With a little over six months left before City of Dreams Manila is expected to open, Melco Crown Entertainment is willing to assist its Philippine subsidiary in the event the latter’s plan to issue debt papers doesn’t yield the kind of returns it needs to finish the development of its integrated resort and casino project with the Henry Sy-owned Belle Corporation.
In a disclosure Melco Crown (Philippines) Resorts Corp told to the Philippine Stock Exchange, the company made it clear that it would allow its unit MCE Leisure (Philippines) Corp. to borrow $340 million from MCE (Philippines) Investments Ltd. with Melco Philippines, MCE Holdings (Philippines) Corp, and MCE Holdings No. 2 (Philippines) Corp, all subsidiaries of the Macau-based operator, guaranteeing the loan.
The issuance of the debt papers isn’t scheduled until the end of January, so its entirely plausible that there might not be any need for any loans to be taken out if the company receives enough to guarantee use for capital expenditure and debt repayment. But Melco wants to cover all of its bases, and is making sure that if these debt papers fail to yield the expected returns, a contingency plan is in place to ensure that the money keeps on flowing in time for the resort and casino’s grand opening in the middle of next year.
“The shareholder loan is intended to be a back-up facility arrangement and it is currently expected that it will only be utilized by the borrower in the unlikely event that the senior notes offering consisting of P15 billion aggregate principal amount of five percent senior notes due 2019, which was priced on December 19, will not be completed,” Melco Philippines said in its disclosure to the Philippine Stock Exchange.
Once completed, the $1.3-billion City of Dreams Manila will be the second of the four integrated resorts and casinos to rise at Entertainment City, following in the footsteps of Enrique Razon’s Solaire Resort and Casino, which opened for business last March.