Hotel and casino operator Macau Legend Development last week raised about HK$1.35 billion (US$174 million) from a sale of new shares to revamp the largest casino complex in the Macau peninsular by site area, Macau Fisherman’s Wharf.
The firm, which operates three casinos in the former Portuguese colony, said on Friday it had placed up to 188 million shares at HK$7.25 each, a discount of 7.76% to the closing price of HK$7.86 on January 16.
As a result, the shares fell 1.53% on Friday to HK$7.74 well above the placement price.
Macau Legend first listed its shares on the Hong Kong stock exchange in July at HK$2.35 but only after halving the size of its IPO as markets grew volatile and worries over the future of Federal Reserve policy intensified. So several equity analysts were expecting the company to attempt further equity financing, that overhang has been gradually removed since.
Macau, Asia’s answer to Las Vegas, is booming as mainland Chinese travellers unable to gamble elsewhere in China flock to the territory. As if to underline Macau’s spectacular rise, news broke Friday that Lui Che-Woo, founder of Macau casino operator Galaxy Entertainment, had overtaken mighty Li Ka-Shing on the Bloomberg Billionaires Index.
With the HK$2.0 billion raised from the IPO, this latest top-up placing of shares, the HK$4.0 billion five-year term loan facility currently under negotiation with ICBC Macau, and internally generated funds Macau Legend said it has all the funds it needs to redevelop Macau Fisherman’s Wharf by 2016.
Fisherman’s Wharf is located on the Macau peninsula and is close to the main ferry port, which serves as the entry point to the territory for about 70% of all incoming passenger traffic.
The placement represented about 3.01% of the existing issued share capital and 2.92% of its enlarged capital base after the top-up placing.
CLSA and Credit Suisse were joint placing agents. CLSA was the sole sponsor for its IPO, while Credit Suisse was a bookrunner on the listing.
Pachinko hall operator Dynam Japan Holdings, the cornerstone investor of the Macau Legend’s IPO, increased its investment by US$50 million during the placement. Dynam was lined up to participate in the placement ahead of the deal according to one person familiar with the matter.
Other investors included nine institutions and a limited of high net worth individuals from Hong Kong and Macau, the person said.
Macau Legend, which is controlled by business entrepreneur and former Macau legislator David Chow, doesn’t have a gambling licence of its own but operates its casinos under a service agreement with Stanley Ho-controlled SJM Holdings.
Based on profit-sharing arrangements, concessionaires charge gaming service providers a fee derived based on a percentage of gross gaming revenue. Macau Legend therefore effectively shares 3% and 5% of VIP and mass gross revenue with SJM, respectively.
The firm is raising capital to revamp the existing facilities at Macau Fisherman’s Wharf as well as adding new ones, including Harbourview Hotel, Legend Palace Hotel, Legendale Hotel, a general entertainment and cultural facility, a yacht club at the Marina and other attractions and a canopied open-air shopping, dining and entertainment colonnade.
The overhaul will boost the group’s number of hotel rooms to nearly 1,800 and the number of gaming tables at the casinos in the five-star hotel Landmark Macau and Macau Fisherman’s Wharf from 146 tables to 500.
