Melco China Resorts reports second quarter 2009 financial and operational results



    BEIJING, Aug. 25 /CNW/ - Melco China Resorts (Holding) Limited (TSXV:
MCG) ("Melco China Resorts" or the "Company"), today reported its financial
results for the three and six-month period ended June 30, 2009 (the "Reporting
Period"). Melco China Resorts reports in Canadian Dollars.

    Corporate Developments

    Update On Financings

    Subsequent to the quarter the Company announced on August 20, 2009 that
it had entered into a definitive agreement with China Entertainment Globe Ltd.
("CEG") in which CEG will subscribe for 95,000,000 common shares at a
subscription price of $0.15 for a total subscription price of $14,250,000 (the
"Private Placement"). CEG will subscribe for approximately 49.8 percent of the
equity interest of the Company (on an enlarged basis and assuming the
conversion of Melco China Resorts' outstanding Class B non-voting shares). The
subscription by CEG is expected to close on the business day following the
notice of satisfaction of all of the closing conditions set forth in the
subscription agreement and binding letter agreement (collectively the
"Definitive Agreements") entered into by the Company and CEG. The Private
Placement is subject to the fulfillment of a number of closing conditions as
previously announced. The Definitive Agreements are available electronically
on www.sedar.com.
    CEG has agreed to work closely with Melco China Resorts' management and
provide its expertise and networks in connection with (i) Melco China Resorts'
real estate development and sales; (ii) renewal of Melco China Resorts' Harbin
Bank loan, and (iii) discussions with the Jilin Government in connection with
Melco China Resorts' retention of the Beidahu resort and project. Further, CEG
has agreed to arrange third party(ies) to provide RMB funding directly to
Melco China Resorts' subsidiaries with an aim to provide sufficient funding to
meet the Company's current development and operating obligations on terms to
be agreed and acceptable to the board of directors of Melco China Resorts.

    Update On Beidahu

    The acquisition terms of the Beidahu Resort from Jilin Beidahu Sports and
Tourism Industry Development Company Limited ("Jilin Beidahu Development
Zone") included an initial payment of RMB 30 million ($5.1 million) paid on
March 1, 2008, a second installment of RMB 70 million ($11.8 million) due
December 31, 2008, and a final payment of RMB 120 million ($20.3 million) due
December 31, 2010. Since December 2008, the Company has been in discussions
with Jilin Beidahu Development Zone to postpone the second installment of RMB
70 million ($11.8 million).
    Subsequent to the second quarter of 2009, a formal notice to terminate
the sale and purchase Agreement signed on November 22, 2007 ("Sale and
Purchase Agreement") was issued by Jilin Beidahu Development Zone in
accordance with the terms of the Sale and Purchase Agreement on the basis of
the Company's default in payment of the second installment. The Company is
reviewing a number of strategic options to retain this resort but at the date
of this news release, there can be no guarantees that such options shall be
successful.

    Financial Results

    Given the Company completed the acquisition of Melco Cayman and its ski
resorts on May 28, 2008, the actual comparative results for the three-month
and six-month periods ended June 30, 2008 only include the results from May
27, 2008 to June 30, 2008, representing approximately one-month operating
results.
    Total revenue and the net results were from resort operations with no
real estate sales activities being undertaken during the three and six-month
periods ended June 30, 2009. For the three-month period ended June 30, 2009,
the Company generated revenues from resort operations of $0.15 million and a
net loss of $ 8.52 million or $0.10 per share. The loss in the second quarter
was primarily due to reduced revenue from ski operations as the resorts closed
at the end of their respective ski seasons in late March or early April.
    For the six month period ended June 30, 2009, the Company generated
revenues from resort operations of $3.39 million and a net loss of $20.15
million, or $0.23 per share. In addition to the aforementioned factors,
results in the six-month period were negatively impacted by a $4.9 million
one-time charge related to transaction and closing costs for a new RMB 250
million ($42.2 million) debt facility from the China Construction Bank secured
in March 2009, an increase in bank loan interest pertaining to the new
facility, and additional depreciation charges on an increase in buildings and
facilities associated with the completion of hotels at Yabuli Resort in
February 2009.
    Capital expenditures totaled $1.53 million and $18.10 million for the
three and six month periods respectively, which was within the Company's
budget for the period and mainly included progress payments for the
construction and major improvement of the on-mountain resort center facilities
at Yabuli Resort.
    Cash and cash equivalents totaled $14.21 million and working capital was
negative $58.5 million as at June 30, 2009. The balance includes an $11.8
million obligation fallen due on December 31, 2008 for part of the
consideration for the acquisition of the Beidahu Resort. Further, it includes
a $20.3 million bank loan which is due in February 2010 and construction and
other contracts related primarily to the resort and hotel operations and the
real estate business amounting to $20.0 million, which are due in 2009.

    Operations

    Sky Mountain Beidahu www.skymountainbeidahu.com/

    Beidahu Resort opened for winter operations on November 12, 2008 and
closed on March 22nd, 2009 for a 131 day operating season. Revenue at the
Beidahu Resort for the three and six month periods ended June 30, 2009 was
$0.08 million and $1.73 million respectively. EBITDA for the respective
periods was negative $0.49 million and negative $0.19 million.
    As previously noted herein, subsequent to the second quarter of 2009, the
Company received a formal notice to terminate the Sale and Purchase Agreement
for the Beidahu Resort from Jilin Beidahu Development Zone.

    Sun Mountain Yabuli www.sunmountainyabuli.com/en/

    Yabuli Resort officially opened in late January 2009 and closed on April
6, 2009. Revenue in Yabuli Resort for the three and six month periods was
$0.01 million and $0.93 million respectively. The shortened season resulted in
negative EBITDA of $1.65 million in the second quarter and negative EBITDA of
$3.61 million in the first half of 2009.
    The Company anticipates that with the stabilization of operations of this
resort with the completion of the major redevelopment works, ski season
operations should normally open mid November providing a 120 day winter
operating season.
    Subsequent to the second quarter of 2009, the Company reached an
agreement to complete the construction of 75 homes already partially
constructed to their first floors with Melco China Resorts' existing Harbin
general contractor. The agreement includes a recommencement payment of $8.4
million for the construction of three fully furnished homes together with 72
homes constructed to bare shell only paid in three advances of $4.2 million,
$3.4 million and $0.8 million subject to specific construction milestones
being completed. The recommencement payment of $8.4 million is a partial
amount of the total construction cost for the resort homes project, which will
be finalized during the latter half of 2009 when furnishings, fixtures, and
equipment together with all finishes are specified, selected and finalized.

    Changchun Resort

    Changchun Resort opened after winter operations on November 23, 2008 and
closed for operations on March 15, 2009 for a 113-day operating season.
Revenue at the Changchun Resort for the second quarter and six months ended
June 30, 2009 was $0.06 million and $0.74 million respectively. EBITDA was
negative $0.15 million in the second quarter and $0.03 million in the first
half of 2009. The resort primarily services a regional market from the city of
Changchun and was originally purchased as a feeder resort to drive traffic to
the Company's larger destination resorts of Yabuli and Beidahu.
    As previously announced, the Company is in discussions regarding the
possible divestment of the Changchun Resort so as to limit its ongoing capital
expenditures and reduce debt. Current debt attributed to this resort is $4.2
million and is repayable on demand.

    Note: Earnings Before Interest Taxes Depreciation and Amortization
("EBITDA") is a non-GAAP financial measure, which the Company believes is
meaningful information for purposes of performance evaluation and it allows
for comparisons of the Company's performance to the industry as it eliminates
the impact of financing decisions, capital structure and the cost basis of
assets.

    
    Financial Highlights
    Summary Financial Results
    -------------------------------------------------------------------------
                                                                      Period
                                                                        from
                                 For the     For the     For the  February 6,
                             three-month three-month   six-month  2008 (date
    (in thousands of              period      period      period  of incorp-
     Canadian dollars              ended       ended       ended     oration)
     except for per share        June 30,    June 30,    June 30, to June 30,
     data)                          2009        2008        2009        2008
    -------------------------------------------------------------------------
    Revenue                   $      149  $       56  $    3,394  $       56
    -------------------------------------------------------------------------
    Operating expenses            (2,448)       (153)     (7,175)       (153)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Other income                       3           7          43           7
    -------------------------------------------------------------------------
    General and administrative
     expenses                     (1,567)     (4,805)     (6,402)     (4,805)
    -------------------------------------------------------------------------
    Depreciation and
     amortization                 (2,951)       (353)     (4,975)       (353)
    -------------------------------------------------------------------------
    Operating loss                (6,814)     (5,248)    (15,115)     (5,248)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total non-operating income
     and expenses                 (1,742)        678      (5,109)        678
    -------------------------------------------------------------------------
    Recovery of/(provision for)
     future income taxes              39          (4)         79          (4)
    -------------------------------------------------------------------------
    Net loss                  $   (8,517) $   (4,574) $  (20,145) $   (4,574)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net loss per share (Basic
     and Diluted)                  (0.10)      (0.14)      (0.23)      (0.22)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Weighted average number
     of shares outstanding
     (Basic and Diluted)      87,439,344  33,617,478  87,439,344  20,953,359
    -------------------------------------------------------------------------



    Balance Sheet Key Indicators

    (in thousands of Canadian dollars except for ratios)       June 30, 2009

    Current Ratio(1)                                                  0.35:1
    Free Cash                                                         14,205
    Working Capital(2)                                               (58,529)
    Total Assets                                                     290,921
    Total Debt(3)                                                    161,798
    Total Equity(4)                                                  129,123
    Total Debt to Total Equity Ratio                                  1.25:1

    (1) Current ratio is defined as total current assets divided by total
        current liabilities
    (2) Working capital is defined as total current assets less total current
        liabilities
    (3) Total debt is defined as total current liabilities plus total non-
        current liabilities
    (4) Total equity is equal to the total shareholders' equity
    

    The ability of the Company to meet its current obligations is dependent
on its ability to source financing and/or investment from external sources due
to its limited income generating capability while in a development stage.
During the second quarter of 2009 and subsequent to that quarter, the Group's
cash balance continued to decline with limited revenue from operations and no
inflows from additional bank financing, loans or equity funding. The Company
continues to manage its cash flow and accounts payable requirements. However,
the Company requires immediate additional financing to meet its working
capital deficit and therefore does not have sufficient cash or debt facilities
to pay its existing liabilities or fund future operations. Except as set out
herein, no other agreement with lenders or potential investors has been
reached yet and there can be no assurance that such agreements will be
reached, nor that financing efforts will be successful. If the financing
efforts are unsuccessful or are not available on reasonable terms, the Company
does not have sufficient funding to meet its current obligations or on-going
operational and development requirements. In this situation the Company would
need to immediately suspend portions, if not all, of its operations and
consider other alternatives.
    Melco China Resorts will host a conference call to discuss its
operational and financial results for the second quarter ended June 30, 2009.
Graham Kwan, CEO and Danny Liu, CFO of Melco China Resorts will host the call.

    
    Management invites analysts and investors to participate on the conference
call:

    Date:                    August 25, 2009

    Time:                    10:00 am EST

    Dial In Number:          416-340-8018 or 866-223-7781

    Taped Replay:            416-695-5800 or 800-408-3053
                             (available for 7 days)

    Taped Replay Pass code:  5376745

    Live webcast link:
    http://events.digitalmedia.telus.com/melcochina/082109/index.php
    

    About Melco China Resorts

    Melco China Resorts operates China's two largest premier destination
mountain resort properties, the Sun Mountain Yabuli resort, host of the 2009
World University Games and the Sky Mountain Beidahu resort. Melco China
Resorts is transforming these properties into world-class, four seasons luxury
mountain resorts with excellent real estate investment opportunities for
discerning buyers. Melco China Resorts' leadership team boasts a proven record
of resort development success both internationally and in China.
    www.melcochinaresorts.com

    
    The TSX Venture Exchange nor its Regulation Services Provider (as that
    term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.
    

    FORWARD LOOKING INFORMATION

    Information in this press release that is not current or historical
factual information may constitute forward-looking information within the
meaning of securities laws, and actual results may vary from the
forward-looking information. Implicit in this information are assumptions
regarding future operations, plans, expectations, anticipations, estimates and
intentions, such as the plans to develop the ski resorts in China. These
assumptions, although considered reasonable by Melco China Resorts at the time
of preparation, may prove to be incorrect. Readers are cautioned that actual
future operating results and economic performance of Melco China Resorts are
subject to a number of risks and uncertainties, including general economic,
market and business conditions, uncertainty relating to land use rights,
adverse industry events for the ski and real estate industries, Melco China
Resorts' ability to make and integrate acquisitions, the requirements of
recent Chinese regulations relating to cross-border mergers and acquisitions,
the inability to obtain required approvals or approvals may be subject to
conditions that are unacceptable to the parties, changing industry and
government regulation, as well as Melco China Resorts' ability to implement
its business strategies, dispose of assets or raise sufficient capital,
seasonality, weather conditions, competition, currency fluctuations and other
risks, and could differ materially from what is currently expected as set out
above.
    Forward-looking information contained in this press release is based on
current estimates, expectations and projections, which MCR believes are
reasonable as of the date of this press release. Melco China Resorts uses
forward-looking statements because it believes such statements provide useful
information with respect to the operation and financial performance of Melco
China Resorts, and cautions readers that the information may not be
appropriate for other purposes. Readers should not place undue importance on
forward-looking information and should not rely upon this information as of
any other date. While Melco China Resorts may elect to, it does not undertake
to update this information at any particular time.

    %SEDAR: 00008944E




For further information:

For further information: Melco China Resorts, Investor Relations, Kevin
O'Connor, Tel: (416) 962-3300, Fax: (416) 962-3301, Email:
investor_relations@melcochinaresorts.com

Organization Profile

MELCO CHINA RESORTS (HOLDING) LIMITED

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