Crown acquisition will help Japan bid: Lawrence Ho

Wednesday 5th of June 2019

Melco Resorts chairman and CEO, Lawrence Ho says that their recent acquisition of shares in Crown Resorts will help to accelerate their bid for a Japan casino license.

Mr. Ho was speaking at a special media roundtable on Tuesday in Macau, where he also expressed optimism for Macau’s gaming revenue growth this year.

The Macau gaming operator has had his eye on the Japan gaming market for some time, previously calling it a “priceless opportunity,” and adding that it would be willing to do everything possible to secure a license.

“The priority right now, of course, is Japan and anything that will help us in Japan... From Melco's perspective, it's really a continuation of our expansion globally that we've been doing from the last two years,” said Ho, quoted by Macau Business.

“Japan is our ultimate goal, and everything that we've been building for the last few years is really to build up a strong showcase with the Australian and the London asset I think it continues to accelerate our push for Japan,” he added.

The company purchased a 19.99 percent share in Crown Resorts last week.

Crown to further increase stake, say S&P Global

S&P Global Ratings says it expects Melco Resorts to spend an additional US$300-400 million to further increase its stake in Crown Resorts in 2020.

However, the company is not expected to become the controlling shareholder of Crown Resorts during the period.

The company made the prediction in a note on Thursday, where it also re-affirmed its “BB” rating of Melco Resorts (Macau) on having sufficient ‘cushion’ to absorb 19.99 percent acquisition of Crown shares.

“We believe MLCO's strong operating cash flows will provide sufficient financial buffer for the group's acquisition of stake in Crown Resorts. We anticipate the company will generate US$1.2 billion-US$1.5 billion of operating cash flow per year in 2019 and 2020,” it wrote on Wednesday.

S&P Ratings says it expects the group to scale back its share repurchases to focus on capital investments over the next 12 months.

“The acquisition of Crown Resorts will enhance MLCO's business position, in our view. Crown Resorts owns high-quality casino assets that generate strong operating cash flows in a favorable regulatory environment. The immediate financial benefits of MLCO's shareholding in Crown Resorts will be a stream of stable dividend income,” it added.

Should Melco decide to purchase additional stake beyond the $300-400 million, S&P Ratings says it could further improve MLCO's operating scale and geographic diversity.