Melco called for a fund raising to help complete Phase 2 of its development, and is expected to raise between US$450 million and US$500 million
Melco Resorts & Entertainment reveals that it cannot meet the deadline completion of Phase 2 of the integrated resort development in Macau - Studio City - on May 31, 2022.
According to the terms of Macau SAR Government, Melco is obliged to finish the Phase 2 of Studio City by 31 May 2022, since it has previously requested for an extension of the deadline originally set from 24 July 2019.
However, on Wednesday, Melco said, “Prior to the Covid-19 outbreak, we estimated a construction period of approximately 32 months for the remaining project,” Melco explained, “With the disruptions from the Covid-19 outbreak, the construction period has been delayed and is expected to extend beyond the estimated 32 months and the current development period.”
“In the event that additional time is required to complete the development of the remaining project for Studio City, we will have to apply for an extension of the relevant development period which shall be subject to Macau government review and approval at its discretion.” The company added.
According to Melco’s SEC filing, the current project outlay costs US$104.9 million, with an estimated full development cost to range between US$1.25 billion and US$1.3 billion.
Melco had announced the call for a fund raising to help complete the Phase 2 of its development, and is expected to raise between US$450 million and US$500 million, with some coming from the private placement to current shareholders.
“Although we have already made significant capital investments for the development for the remaining land of Studio City, we expect to require significant additional capital investments to complete the development,” the company said.
Melco expressed, “We have taken various mitigating measures to manage through the current Covid-19 outbreak challenges, such as implementing a cost reduction program to minimize cash outflow of non-essential items and rationalizing our capital expenditure program with deferrals and reductions which benefits our balance sheet,”
The company stated, “During April and May of 2020, our average daily operating costs were approximately US$0.7 million, reflecting a decrease from the run-rate levels in the first quarter of 2020.”