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Announcement:

Moody's: MCE Finance's ratings unaffected by Melco's agreement to acquire shares from Crown

16 Dec 2016

Hong Kong, December 16, 2016 -- Moody's Investors Service says that MCE Finance Limited's Ba3 corporate family rating and stable rating outlook are unaffected by the share purchase transaction announced on 15 December 2016 involving other Melco group companies.

"Moody's believes that any financing to facilitate the share purchase will be done outside of MCE Finance Limited or its parent Melco Crown Entertainment Limited," says Stephanie Lau, a Moody's Assistant Vice President and Analyst.

In addition, the share purchase transaction will not trigger any change of control provisions within MCE Finance Limited's senior unsecured notes. The change of control clause requires the sponsors -- namely Melco International Development Limited (unrated) and Crown Resorts Limited (Baa2 stable) -- to collectively own at least 30% of the outstanding capital stock of Melco Crown Entertainment Limited (unrated).

Melco International Development's potentially higher debt leverage after the share purchase could lead to higher cash dividend upstreams from Melco Crown Entertainment, which in turn could imply a higher need for MCE Finance to upstream dividends to its parent.

Nevertheless, this concern is mitigated by MCE Finance's adequate financial flexibility, as highlighted by its cash and deposits of around USD1.2 billion and undrawn banking facilities of USD1.25 billion at end-September 2016.

On 15 December, Melco Crown Entertainment Limited announced that its major shareholder, Melco Leisure & Entertainment Group Limited (unrated), had agreed to acquire 13.42% of the current shares outstanding of Melco Crown Entertainment Limited.

The shares will be purchased from Crown Asia Investments Pty. Ltd (unrated) for a consideration of about USD1.2 billion and Moody's expects the share purchase to be partly debt funded.

Melco Leisure & Entertainment Group Limited, the purchaser, is a wholly owned subsidiary of Melco International Development Limited.

Crown Asia Investments Pty. Ltd, the seller, is a wholly owned subsidiary of Crown Resorts Limited.

On the same date, Crown Asia announced the launch of an underwritten secondary public offering of Melco Crown Entertainment's American depositary shares (ADSs), each representing three ordinary shares.

Under this transaction, Crown Asia has agreed to sell an additional 2.77% of the current shares outstanding of Melco Crown Entertainment to the underwriters, which will in turn resell these shares in the form of ADSs in a public offering.

In addition, Crown Asia also entered into cash-settled swap transactions relating to a fixed number of Melco Crown Entertainment's ADSs with dealers which are affiliates of each of the underwriters.

In connection with the hedging of their exposures under these swap transactions, the dealers or their affiliates will borrow an aggregate of 27,331,933 ADSs of Melco Crown Entertainment from Melco Leisure & Entertainment Group. The dealers will in turn sell, or cause their affiliates to sell, the borrowed ADSs through the underwriters in the same underwritten offering.

Upon the closure of the share purchase and the public offering, Melco Leisure & Entertainment's shareholding in Melco Crown Entertainment -- which owns 100% of MCE Finance -- will rise from 37.89% to 51.31%.

Concurrently, Crown Asia's shareholding will fall from 27.4% to 11.21%.

The share purchase is subject to Macau regulatory approval, finalization of financing arrangements and other customary closing conditions.

The public offering and swap underwritten offering are expected to occur on or about December 20, 2016, subject to customary closing conditions. Melco Crown Entertainment will not receive any of the proceeds from these transactions, nor will it issue any new shares in connection with these transactions.

The principal methodology used in these ratings was Global Gaming Industry published in June 2014. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

MCE Finance Limited is a subsidiary of Melco Crown Entertainment Limited (unrated), which is in turn majority-owned by the Hong Kong-listed Melco International Development Limited (unrated) and the Australian-based gaming operator, Crown Resorts Limited (Baa2 stable). Currently, the two companies collectively hold an approximate 65.3% equity stake in Melco Crown Entertainment Limited.

Through Melco Crown (Macau) Limited, MCE Finance Limited holds one of six gaming concessions/sub-concessions in Macao and operates two casinos in the territory; namely, Altira Macau and City of Dreams, as well as approximately 1,300 slot machines in Macao through its Mocha Clubs.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Stephanie Lau
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

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