Melco Subsidiary Faces Delisting from Philippine Stock Exchange Unless It Significantly Ups Number of Public Shareholders

Posted on: May 16, 2019, 10:16h. 

Last updated on: May 16, 2019, 10:16h.

Melco Resorts and Entertainment (Philippines) Corporation has less than a month to increase the amount of its stock owned by the public — or it will be delisted from the Philippine Stock Exchange (PSE).

Melco Resorts & Entertainment Ltd CEO and Chairman Lawrence Ho faces a delisting of his Philippines subsidiary from the nation’s stock exchange. (Image: Reuters/Bobby Yip)

The exchange released a memo on Tuesday warning that as of June 11 Melco’s Philippines subsidiary will be automatically delisted without the required changes.

Under exchange rules, at least 10 percent of a company’s stock needs to be owned by the public. The investing public only owned 3.9 percent of the subsidiary’s stock as of Dec. 10, according to the Manila Standard.

The company is currently under a six-month suspension imposed by the PSE. It started on Dec. 10, when exchange officials stopped the trading of Melco shares.

The issue involves a tender offer by MCO Investors Ltd. That company is Melco’s principle shareholder.

Last September, MCO was going to delist Melco voluntarily. But after complaints were voiced by smaller shareholders, MCO backed away from delisting.

A main contention was over the valuation for the tender offer — basically a proposal to sell back investments to shareholders for PHP7.25 (US $0.14) a share.

Melco officials also questioned the wisdom of remaining on the PSE. Last year, they complained the PSE listing did not help Melco find new revenue.

Despite the dispute, a tender offer went through and was completed on Nov. 29. It led to the upping of the number of shares owned by MCO.

As of last December, MCO had 5.462 billion common shares. That represents some 96.1 percent of the company’s stock.

Melco is best known in the Philippines for operating City of Dreams Manila resort casino located in Entertainment City. The $1.3 billion venue opened in 2014.

It includes six hotel towers and an 18,000-square-foot gaming floor. There are more than 1,600 slot machines and 360 table games.

Cyprus Expansion Underway

Melco Resorts & Entertainment Ltd., which is listed on the Nasdaq stock exchange in the US, is the parent company of Melco Resorts and Entertainment (Philippines) Corporation.

Another Melco venue is scheduled to open on Cyprus in 2021. Known as City of Dreams Mediterranean, the company was to start construction on the $617 million casino resort last month.

When complete, it will include 100 gaming tables and some 1,000 slot machines. The casino is predicted to become the largest in all of Europe.

Last July, Melco opened a temporary casino on Cyprus. It features 242 slot machines and 33 gaming tables.

Hoping for Osaka

Melco is also vying for a gaming license in Japan. Company leaders are announcing high amounts they plan to invest there.

If Melco Resorts & Entertainment were able to capture a license in Japan, CEO and Chairman Lawrence Ho says his company would be willing to invest more than $10 billion, GGRAsia reported.

The company appears most interested in opening a venue in Osaka, which is located on the island of Honshu. Initially, Japan is allowing only three new gaming resorts nationwide.

Currently, Melco operates three venues on Macau: City of Dreams, Studio City and Altira Macau.  It also operates Mocha Clubs on Macau, which feature gaming machines.

Earlier this month, Melco Resorts beat Wall Street expectations in the first quarter of 2019. The casino operator reported $1.36 billion in revenue — or $0.28 per share. That’s a 3.72 percent increase over the same three months in 2018.

The performance also represents the fourth consecutive quarter that the company beat expectations.