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Announcement:

Moody's: MCE's ratings unaffected by proposed consent solicitation

 The document has been translated in other languages

24 Oct 2012

Hong Kong, October 24, 2012 -- Moody's Investors Service says that MCE Finance Limited's announcement of its proposed consent solicitation will have no immediate impact on its Ba3 corporate family rating and B1 senior unsecured bond rating, as well as Melco Crown Gaming (Macau) Limited's Ba3 secured debt rating.

The ratings outlook remains stable.

MCE Finance, which is wholly-owned by Melco Crown Entertainment, owns a 100% economic interest in Melco Crown Gaming, which runs the group's major operating assets in Macau.

These include Altira Macau, City of Dreams, and approximately 2,100 slot machines through Mocha Clubs, and are collectively referred to by Moody's as "the Melco Crown Group."

The solicitation -- if it is approved by bondholders -- would amend certain covenants governing USD600 million in bonds due 2018, and issued by MCE Finance.

These include (1) the definition of covenants in relation to restricted payments, asset sales, permitted investments, and permitted liens (the "proposed base amendments"); and (2) an amendment in the restricted payment covenant that will allow MCE Finance to provide an additional, one-off, restricted payment of USD400 million, to fund the development of the Macau Studio City Project (the "proposed restricted payment basket amendment").

"The additional USD400 million in cash to fund the Macau Studio City Project will reduce the cash holdings of MCE Finance, but its overall liquidity will remain adequately supported by its remaining and ample cash holdings of approximately USD800 million given it had a cash holding of around USD1.2 billion as of June 2012," says Kaven Tsang, a Moody's Vice President and Senior Analyst.

"MCE Finance's liquidity is further supported by Moody's projection of an annual EBITDA of USD600 million-USD700 million, which can fully support its maintenance capex, estimated at USD50 million per annum, as well as its minimal debt repayment needs for the coming 12 months," adds Tsang, who is also Moody's lead analyst for the Melco Crown Group.

Moody's notes that the additional USD400 million cash distribution is a one-off transaction, and any future cash distribution beyond the amount permitted by the restricted payment covenants in the existing rated secured loan facilities and US dollar bonds would warrant a reassessment of MCE Finance's ratings.

The proposed cash distribution will not have a material impact on MCE Finance's financial profile.

Moody's projects that MCE Finance's debt/EBITDA will stay at around 2.5x and EBITDA interest coverage at around 6.5x-7.0x, underpinned by the company's stable operations at the City of Dreams, which will continue to support its Ba3 corporate family rating.

Meanwhile, the proposed base amendments are mainly technical amendments to provide the group with the flexibility to manage its projects outside MCE Finance, and therefore will not have material adverse impact on the credit profile of MCE Finance.

The principal methodology used in these ratings was Moody's Global Gaming Methodology, published in December 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

MCE Finance Limited is a subsidiary of NASDAQ-listed Melco Crown Entertainment Ltd (unrated), which is majority-owned by the Australian-based gaming operator, Crown Limited (Baa2 stable) and Hong Kong-listed Melco International Development Ltd (unrated). Each company has an equity stake of approximately 33%.

Melco Crown Gaming is the key operating company within the MCE Finance group holding one of six gaming concessions/sub-concessions in Macau.

Kaven Tsang
Vice President - Senior 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

Moody's: MCE's ratings unaffected by proposed consent solicitation
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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