Macau casino operator Melco Crown Entertainment revealed in its annual report released this week that unless it receives an allocation of at least 400 gaming tables at its soon-to-open Studio City project it risks being technically in default with its lenders for a US$1.4 billion loan for the development.
“Under the Studio City Project Facility, we are required to satisfy certain conditions relating to formal opening of the property by October 1, 2016. These conditions require, among others, the full opening of Studio City for business to the general public by October 1, 2016, with a minimum 400 gaming tables available for operation, and a minimum area of public floor space occupied and open for operations,” says the annual report, which was lodged with the Nasdaq in New York, where Melco Crown is listed.
“In the event that we are unable to meet these conditions, it may constitute an event of default under the Studio City Project Facility. Any such event of default could cause all amounts outstanding with respect to the Studio City Project Facility to become due and payable immediately and entitle the lenders to take enforcement actions (unless the event of default is waived, or the debt is restructured or repaid).”
Melco Crown chief executive Lawrence Ho has previously said the company “hoped” to get as many as 400 tables for the initial operation of Studio City.The $3.2 billion Hollywood-inspired gambling and entertainment complex has already secured partnerships with Warner Bros and comic book outfit DC Entertainment.
Melco Crown also revealed a joint venture with Taubman Asia, a subsidiary of US mall REIT, Taubman Centers, to deliver an entertainment-centered shopping experience at Studio City.
Taubman Asia will provide merchandising, marketing and management services for the so-called “Boulevard at Studio City, described by the company as a unique, 300,000 sq ft. “immersive” retail entertainment environment.
“Taubman Asia is in the business of creating world-class experiences for our customers,” said Mr René Tremblay, President of Taubman Asia.
“Along with Melco Crown Entertainment, we are developing a one-of-a-kind retail entertainment experience that will cater to the discerning tastes of Greater China’s consumers.”
The opening comes at a difficult time for Macau casino operators in the wake of the Chinese government’s anti-corruption campaign. According to statistics released by the Macau government, gaming revenue in the region dropped 36.5% year on year in the first quarter of 2015.
