The company announced it is ready to invest up to $500 million to increase its stake in the operating vehicle behind 1,600-room Studio City Macau.
Studio City International Holdings Limited was founded in 2006 as a joint venture between a Hong Kong-listed casino company and investment vehicle, New Cotai Holdings, and is tasked with actually running an impressive Macao development featuring 106,000 square feet of game flooring along with the world's first figure-8 Ferris wheel.
Studio City International Holdings Limited recently announced that it plans to offer existing investors the opportunity to buy an additional Class A stock that features an individual price of $3.89. Melco Resorts & Entertainment Limited already holds about 54.3% of the company's existing equity capital, but has now declared that it is looking to acquire the "maximum number of unsubscribed securities available to purchase," which could reportedly cost between $450 million and $500 million.
It has long been interested in fully acquiring New Cotai Holdings and Studio City International Holdings Limited, which was established on a 60/40 basis, with sources elaborating that the completed offering is set to account for 99% of the remaining equity capital of the Macau operating subsidiary.
Although it is unclear whether New Kotai Holdings, which has a 36.3% stake in Studio City International Holdings Limited to date, will participate in the share offer, the supplier has declared that a subsidiary of MSC Kotai Limited has provided the U.S. company with the "right to earn additional participatory interest at a price equivalent to the price of Class A private equity shares."
Iconic Studio City Macau reportedly posted a loss of $9.4 million from adjusted earnings in the first quarter before interest, tax, depreciation and amortization. Melco Resorts and Entertainment Limited reported that the deficit came after the hosts posted a windfall of $96.4 million in the three months of 2019, mainly falling to "softer performance across all gaming segments."