Amid the blithe acceptance of the line spun by James Packer’s Crown and Lawrence Ho’s Melco International about Melco Crown Entertainment’s latest capital raising, two important points were missed.
The $US180 million being sought was increased by the underwriters, but it is far short of the initial fling which sought up to $US400 million.
And the price of $US1.33 a share was far short of the market price of the time of $US4.40. The shares fell 25 cents when that was reported this week. It recovered that yesterday in the 2% plus rise in the market to return to $US4.40.
But the discount on the market price was substantial — around 70%. It’s a sign of how desperate they were to raise the cash (even though the company has plenty of cash on hand, $US755 million at March 31).
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The cost of the raising fees and charges was substantial, another sign of the desperation for the money.
In the filing this week Melco Crown said the net amount from the raising (assuming no over subscriptions) would be $US160 million. That $20 million is equal to 11% of the amount sought.
“As of March 31, 2009, the actual cash balance was approximately US$755 million, excluding cage cash, and, as adjusted to reflect receipt of the net proceeds of this offering (assuming no exercise of the underwriters’ over-allotment option and after deducting underwriting discounts and the estimated offering expenses payable by Melco Crown Entertainment), will be approximately US$915 million. Melco Crown Entertainment estimate that as of March 31, 2009 they had approximately US$244 million of remaining capital expenditure and pre-opening expense budgeted to be paid before the opening of City of Dreams in early June 2009,” Melco Crown said in the prospectus.