Melco Crown Entertainment embarks on a big project in Manila

The casino developer will work with SM Investments.

In a release, Melco Crown Entertainment Limited, a developer and owner of casino gaming and entertainment resort facilities focused on the Macau market, announces that MCE Leisure (Philippines) Corporation, an indirect subsidiary of Melco Crown Entertainment, has entered into a cooperation agreement with SM Investments Corporation, Belle Corporation and PremiumLeisure and Amusement, Inc. to, among other things, regulate the relationship among the parties to the COA, and provide for the contribution of certain amounts to the casino, hotel, retail and entertainment complex in Manila, the Philippines.

The COA stipulates that on Closing the Licensees shall, amongst other things, designate MCE Leisure as the Special Purpose Entity under the Casino License and MCE Leisureshall have the exclusive management, operation and control of the Project.

Under the CAA which sets out the conditions for Closing to occur, Belle shall design, construct and complete the Phase 1 Building and the Phase 2 Building in accordance with the terms set out in the CAA and will, on Closing, lease to MCE Leisure (or its designated entity) the Land and Building Structures for the operation of a hotel, casino,  and resort complex, with retail, entertainment, convention, exhibition, food and beverage services as well as other associated activities.

The Operating Agreement will be signed on Closing and will govern the operation of the Project until the expiry of the Casino License (currently expected to be in July 2033).

Under the Operating Agreement, in consideration of PLAI agreeing to the appointment of MCE Leisure as the Special Purpose Entity under the Casino License in place of PLAI, MCE Leisure shall pay to PLAI Monthly Payments to be derived from the gaming revenues generated from the Project and shall be responsible for the PAGCOR license fee and all applicable costs and expenses relating to the operation and management of the Project.

Such license fee, costs and expenses shall be deducted in calculating the Monthly Payments. MCE Leisure is entitled to retain all profits from non-gaming operations.

MCE Leisure’s total investment in the Project up to Opening is currently expected to be approximately US$600 million, contributed by a combination of cash, cash flow and partly funded by debt financing for approximately US$325 million. The broad economic arrangement between the Parties is designed to allocate total property EBITDA approximately equally, subject to overall property revenue and profitability levels.

Mr. Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment, commented, "Through our management team’s tireless efforts since completing the Memorandum of Agreement in July 2012, we are pleased to announce  this key milestone in relation to realizing our Philippines venture.

We are confident that this project will not only move us closer towards realizing our vision of becoming one of the leading gaming companies in Asia, but willalso provide us with a platform for further expansion in Asia, allowing us to capitalize on future opportunities to drive long term  shareholder value.