HongKong-listed casino operator Melco International Development is seeking a spin-off and separate listing of Studio City International Holdings Ltd. in the U.S.
In a regulatory filing, Melco announced that it has submitted a draft registration statement for an initial public offering (IPO) of its American Depositary Shares (“ADSs”) representing ordinary shares on the Nasdaq Global Market or the New York Stock Exchange.
The number and dollar amount of ADSs proposed to be offered and sold have not yet been determined, according to Melco.
The Studio City casino in Macau is 60 percent owned by Melco Resorts & Entertainment Ltd. while the remaining 40 percent is held by New Cotai Holdings LLC, an entity controlled by United States-based investment firms Silver Point Capital LP and Oaktree Capital Management LP.
Melco Resorts, on the other hand, is 51.2 percent owned by the Hong Kong-listed firm.
“The proposed IPO is expected to commence as market conditions permit and is subject to SCIH publicly filing with the SEC a registration statement on Form F-1 in compliance with the U.S. Securities Act of 1933, as amended (the “Securities Act”), and the SEC’s declaring such registration statement effective,” the firm said in a statement.
Melco clarified that the IPO announcement “does not, and is not intended to, constitute an offer to sell or a solicitation of an offer to purchase any securities in the United States or elsewhere, and it does not, and is not intended to, constitute an offer, solicitation or sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.”
Melco’s planned IPO for Studio City has puzzled many analysts, especially when the it will only add to the complexity of the firm’s organizational structure.
Analysts from Sanford Bernstein were blunt in stating that the IPO “does not make much sense at this stage.”
“At this stage, we do not foresee Studio City receiving an adequate valuation based on the property’s current performance and structure. If it were to go ahead, the pricing would be at a substantial discount,” Bernstein analysts Vitaly Umansky and Zhen Gong said.
Studio City opened in October 2015, underlining Macau’s bid to reinvent itself as a mass-market, family-orientated gaming destination. Studio City didn’t formally begin VIP operations until last November but reported VIP turnover of $4.7b in Q2 2017.