Casino pair seek punters

SYDNEY - James Packer's Publishing & Broadcasting and Melco International Development are planning to sell US$1 billion ($1.6 billion) of shares in an initial public offering of their Macau casino venture, people familiar with the transaction said.

The companies plan to sell 20 per cent of the venture and list the stock on the Nasdaq exchange in New York later this year, said the people, who declined to be named before a statement is made.

Publishing & Broadcasting shares had their biggest gain in almost five years.

Packer, Australia's richest man, and Melco chairman Lawrence Ho, the son of Hong Kong billionaire Stanley Ho, will use the funds to expand in Macau, which is forecast to overtake Las Vegas as the world's biggest gambling market this year. The pair are building two casinos in Macau and last week bought land for a third.

"There's strong investor demand for equity exposure to Macau gaming," said Neil Boyd-Clark, who helps manage about US$3 billion in stocks at ABN Amro Asset Management in Sydney.

"People are optimistic about the number of people in China that are becoming wealthier and will take up gaming in Macau."

Melco shares surged 10 per cent to HK$18.35 ($3.78) yesterday in Hong Kong, and have almost doubled this year.

Shares of Sydney-based Publishing & Broadcasting climbed 97c, or 5.4 per cent, to A$18.99 ($22.88) yesterday in Sydney. The stock has risen 15 per cent this year, compared with a 5.7 per cent gain by the benchmark index.

"The timing of the share sale sounds quite good," said Craig Young, who helps manage the equivalent of US$2 billion at Tyndall Investment Management in Sydney. "Melco's price has moved up so much that to sell down makes a lot of sense."

The IPO, which was reported earlier yesterday by the Australian Financial Review, is subject to the companies getting regulatory approval from the Macau Government for the US$900 million acquisition of a casino licence from Wynn Resorts, which will give Packer and Ho greater control of the Crown Macau and City of Dreams casinos they are building.

The pair on May 18 also agreed to pay HK$1.5 billion ($309 million) for land to build their third casino in Macau, the only place in China where casinos are legal.

Packer and Ho are in talks to buy an adjacent property to double the size of the site, Macao Daily News reported.

A spokesman for Publishing & Broadcasting said the company had no comment on the share sale. Gaming revenue in Macau rose to US$5.76 billion in 2005 and may overtake Las Vegas this year, according to Jonathan Galaviz, a partner at Las Vegas-based Globalysis, which analyses the gaming market.

The Las Vegas Strip earned US$5.54 billion in the first 11 months of 2005, according to the Nevada Gaming Control Board.

Melco's net income rose ninefold to HK$548.7 million in 2005, boosted by a gain from selling some of the rights in Crown Macau, which will open next year, to Packer.

Stanley Ho lost his 40-year gaming monopoly in Macau in 2002.

- BLOOMBERG