Citing “the recent adverse change in credit market conditions in the United States,” Melco PBL Entertainment reported Wednesday that one of its subsidiaries would borrow $1 billion less than it had originally planned to finance City of Dreams, a gambling and entertainment resort on Macau.
In June, the subsidiary, Melco PBL Gaming, secured a commitment of $2.75 billion from a group of banks including Banc of America Securities Asia, Barclays Capital, and Citigroup Global Markets Asia. Now, however, MPBL Gaming will now borrow $1.75 billion–$1.5 billion as a term loan and $250 billion in revolving credit facility.
MPBL Gaming will use the term loan to fund the building of the City of Dreams, holding the revolver in reserve for mishaps that might befall the project and in tune with the banks’ working capital strictures. The term-loan and revolving credit facilities have seven-year and five-year maturities, respectively.
The trimmed down loan will supply MPBL Gaming with enough financing to foot the bill for the first phase of the City of Dreams, which consists of practically all of the casino and 85,000 square feet of retail space, the Hard Rock Hotel, and the Crown Towers Hotel, according to MPBL Entertainment. There’s also enough to fund the completion of the Grand Hyatt Macau twin-tower hotel and a Theatre of Dreams. Macau is a special administrative region of China on the Chinese coast.
MPEL Gaming, however, will now have to scan the skin-tight credit markets for the next few months to find funding for its plans to develop a $353 million apartment-hotel complex on the City of Dreams and a hotel casino proposed for the Macau Peninsula.
Earlier this week, the $2.4 billion Venetian Macao Resort was scheduled to open. The hotel’s casino is more than three times the size of the largest casino in Las Vegas, according to The New York Times.