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Melco shows intent to boost holding as operating entity of Macau’s Studio City reveals US$500 million fund raising offer

Studio City International Holdings Ltd (SCIHL), the operating entity of Macau integrated resort Studio City, has announced the commencement of a series of private placements that will see it receive proceeds of between US$450 million and US$500 million.

The private placements, which will see Class A Shares offered at a price of US$3.89 per share to existing shareholders who hold around 99% of issued share capital between them, would not only boost equity for SCIHL in the face of COVID-19 but may also result in Melco Resorts & Entertainment further increasing its majority stake in the company.

Melco holds slightly more than a 60% interest in Studio City via its wholly-owned subsidiary MCO Cotai, while US hedge fund-backed New Cotai Holdings and its affiliates currently hold a 36.31% stake according to an overnight Melco filing.

While it is not yet clear whether New Cotai itself will purchase offered shares, Melco Resorts said it will “purchase all the Class A Shares offered to it in the Class A Private Placements and, in addition, has indicated it will purchase the maximum number of Unsubscribed Securities available for its purchase under the terms of the Private Placements to the extent offered to it by SCIHL.”

Melco has previously indicated its desire to take full control of SCIHL, originally founded in 2006 as a 60-40 joint venture with New Cotai.

However, SCIHL also announced overnight that as part of the private placements, New Cotai would be offered the right to acquire an additional participation interest in one if its subsidiaries, MSC Cotai, at a price equivalent to the price of Class A Private Placement Shares. MSC Cotai is the entity currently holding all assets and liabilities of SCIHL.

As previously reported, the ability of New Cotai to acquire additional interest may be questionable given it filed for Chapter 11 bankruptcy protection in New York late last year.

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