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Gaming Resort in Macau, Studio City Seeks New York IPO of Up to $360 Million

The Hong Kong-based company plans to sell 28.8 million ADSs at up to $12.50 per share on the NYSE as "MSC."

Anna Vodopyanova
    Oct 10, 2018 10:59 AM  PT
Gaming Resort in Macau, Studio City Seeks New York IPO of Up to $360 Million

Hong Kong-based Studio City International Holdings Ltd. is seeking an initial public offering on the New York Stock Exchange, targeting as much as $360 million for 28.8 million of its American depositary shares.

Studio City, a gaming, retail, and entertainment resort in Cotai, Macau, said it planned to price its shares in the range of $10.50 and $12.50 apiece.

(Source: Studio City's amended prospectus filed Oct. 9)

Macau has the world's largest gambling market, with gross gaming revenue last year reaching five times more than the Las Vegas Strip and seven times more than Singapore, the company said in its prospectus filed Tuesday, citing the Gaming Inspection and Coordination Bureau, the Nevada Gaming Control Board, and Bloomberg Intelligence. During the nine months through September, Macau's revenue jumped 16 percent to $28 billion from a year ago, the company said.

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(Source: Studio City's amended prospectus filed Oct. 9)

Studio City's revenue was $539.8 million in 2017, up 27 percent from 2016. Its loss last year dropped by 69 percent to $76.4 million. For the six months through June 2018, it had revenue of $282.2 million, an 11 percent year-over-year increase. Its net loss for the first half was $14.8 million.

In its filing, Studio City said the gaming market in Macau was expected to increase, driven by a number of factors: the 3.5 billion population in nearby Asian regions, the expansion of outbound tourism in China and its continuing economic development, the diversification in the gaming and non-gaming entertainment sectors, and the improving infrastructure.

The company's casino is operated by Melco Resorts Macau, an arm of Melco Resorts & Entertainment Ltd. and a holder of a gaming subconcession, while Studio City operates its non-gaming businesses.

In addition to the American depositary shares that Studio City plans to offer in its IPO, the company would also sell 800,000 Class A shares, representing 0.3 percent of the voting power in the company, in a private placement to Melco International Development Ltd., one of Hong Kong's oldest companies listed on its stock exchange in 1927. The giant company leads businesses in entertainment, leisure, gambling, technology, investment banking, and property development. Each Studio City ADS represents four Class A ordinary shares.

Further, MCE Cotai Investments Ltd., a subsidiary of Melco Resorts and Studio City's controlling shareholder, and certain affiliates of New Cotai LLC, have proposed to acquire as much as 89 percent of the ADSs at the IPO price, though the company said it is under no obligation to accept the offer. Upon completion of the offering, Melco Resorts would own about 50.1 percent of the voting power in Studio City.

The filing also said that Studio City planned to use the net proceeds of its IPO to acquire newly issued shares of its subsidiary, MSC Cotai Ltd.

Underwriters on the deal are Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. International plc, and Deutsche Bank Securities Inc.

The company seeks to trade its shares under the ticker "MSC." 

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