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James Packer Casino Incurs Additional Expenses

On November 3rd, 2007, the expenses on the City of Dreams of casino of James Packer continue to increase, with the estimated outlay now at $2.1 billion ($2.26 billion) compared with the June expenses of $1.5 billion and December 2006 expenses of $1.5 billion.

The new expenses for the hotel casino building project are stated in the 190 page file to the US Securities and Exchange Commission by the Melco PBL Entertainment, which is hoping to raise $563.8 million in new shares. James Packer's Macau casino interests are being done as a joint business venture with Melco, which is operated by Lawrence Ho.

The latest SEC report, which was made this week, states that the City of Dreams casino project, which is now being constructed by the Leighton Organization, will cost $2.1 billion to construct not including the cost of the land where it will be built. Aside from the $330 million expense of apartment hotel facility which the company also plans to construct on the site.

In June 2007, Melco PBL announced a City of Dreams "project study" which will placed the cost at $1.85 billion - 23% bigger than the predicted $1.5 billion in the statement given out last year when the company listed on the U.S. stock exchange.

The expenses of the project on Macau's Cotai strip, has been affected by a combination of design modifications and higher construction expenses. The SEC filing states that the apartment hotel facility will feature 800 apartments compared to the previous 650 apartments in the announcement on June. It also states that Melco PBL still has not reached an agreement with Government of Macau over the cost of the land.

The company said that they are developing the casino on a property that has not yet been awarded a concession by the Government of Macau on conditions that are acceptable to both sides. The statement by the company also said that the joint collaboration have yet to receive the go-signal from the Government on their plans to expand the gross floor area of the casino site.

The first part of the project, which includes the gaming space, merchandise space and two hotel facilities, is set to open for business on March 2009. But the company warns that they might face further delays which will increase the total expenses. The casino partners debut their first casino/hotel venture in Macau, the smaller Crown Macau in May, although it did not fully open until July 2007.

The company's report said that profit from the Crown Macau improved in July and August but were affected in September by a substantial downfall in the hold rate regarding the casino's VIP gambling operation.

 

Tuesday, November 20 , 2007
Brian Letendre