Jay,
Do you think this might be a good call option on Macau gaming?-D
K. Wah to Acquire Macau Casino for HK$18.4 Bln (Update1)
April 19 (Bloomberg) -- K. Wah Construction Materials Ltd., a Hong Kong-listed builder, said it plans to acquire 97.9 percent of a Macau casino operator for HK$18.4 billion ($2.4 billion) in new shares and other securities.
K. Wah Construction will buy Galaxy Casino SA from the Lui family, which controls the builder through K. Wah International Holdings Ltd., a unit of Guoco Group Ltd. and other shareholders of Galaxy, according to a joint statement today. Galaxy Casino, backed by K. Wah Chairman Lui Che-woo and Sheldon Adelson's Las Vegas Sands Corp., operates a casino at the Waldo Hotel in Macau, the only place in China that allows casino gambling.
Galaxy, backed by K. Wah Chairman Lui Che-woo and Las Vegas Sands, won one of three gaming licenses in 2002 when Macau ended tycoon Stanley Ho's 40-year monopoly. Macau, the world's biggest gaming market after the Las Vegas Strip in 2004, has forecast gambling will contribute a bigger share of the economy in two years as casino operators such as Adelson add blackjack and roulette tables in their quest to replicate the Las Vegas Strip.
Macau last year had $5 billion in gambling revenue, up 44 percent from 2003. During the first two months of this year, Macau's gaming revenue was $831 million, compared with $947 million in the Las Vegas Strip, K. Wah said in the statement.
K. Wah plans to issue 1.84 billion new shares for HK$8 each to finance 80 percent of the purchase. The remainder would be financed through the sale of unsecured fixed-rate notes and possibly some cash, the statement said.
Gaming receipts by 2007 will account for 60 percent of gross domestic product, Manuel Joaquim das Neves, director of Macau's Gaming Control Board, said earlier this month. Macau's economy last year expanded a record 28 percent to 82.7 billion patacas ($10.3 billion), with gambling accounting for half the total. Galaxy Casino has posted profit of HK$72.7 million since the company began operating last July.
K. Wah Construction Material said it plans to change its name to Galaxy Entertainment Group Ltd. The builder forecasts Galaxy will need HK$5.74 billion in the next four years to 2009 to build a casino and hotel resort.
Adelson aims to fill Macau's Cotai, a stretch of reclaimed land in about the size of two football stadiums, in seven to 10 years with casino resorts providing 60,000 rooms. Galaxy's capital expenditure would be financed through debt and stock sales and internal cash, K. Wah said.
To contact the reporter for this story:
Loretta Ng in Hong Kong at lng13@bloomberg.net
To contact the editor responsible for this story:
Reinie Booysen in Singapore at rbooysen@bloomberg.net
Last Updated: April 18, 2005 20:09 EDT
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