Melco China Resorts reports first quarter 2009 financial and operational results

    BEIJING, May 22 /CNW/ - Melco China Resorts (Holding) Limited (TSXV: MCG,
MCG.WT) ("Melco China Resorts" or the "Company"), today reported its financial
results for the three-month period ended March 31, 2009 (the "Reporting
Period"). Melco China Resorts reports in Canadian Dollars.

    Financial Results

    Melco China Resorts was incorporated on February 6, 2008. On May 27, 2008
the Company acquired Melco China Resort Investment Limited ("Melco Cayman"),
which owned five operating ski resorts (Yabuli, Beijing, Lotus, Changchun, and
Beidahu, collectively the "Resorts") in China for redevelopment into "four
season" mountain resort destinations. Melco Cayman had been operating the
Resorts and undertaking significant operational improvements since 2007. Melco
China Resorts became a publicly traded company on May 28, 2008. As the Company
had no significant assets and did not have any results of operation and cash
flow during the period from February 6, 2008 (date of incorporation) to March
31, 2008, there are no comparative results for the corresponding period in
    On November 27, 2008, Melco announced that it had elected to divest the
Beijing, Lotus, and Changchun properties as part of its capital conservation
plan to combat the effects of the global economic slowdown. Melco China
Resorts entered into binding contracts for the divestiture of Beijing and
Lotus properties on December 12, 2008 and approvals from the authorities have
been obtained for the divestiture. Furthermore, Melco China Resorts is
currently in discussions regarding the possible divestiture of the Changchun
    Total revenue and the net results were from resort operations with no
real estate sales activities being undertaken during the Reporting Period. For
the three-month period ended March 31, 2009, the Company generated revenues
from resort operations of $3.2 million and a net loss of $ 11.6 million or
$0.13 per share. The loss was primarily due to a $4.9 million one-time charge
related to transaction and closing costs for new debt facilities secured
during the reporting period and lost revenue from the Sun Mountain Yabuli
resort caused by delays in opening for the winter ski season. Excluding the
impact of the one-time charge, the Company reported a net loss of $6.7
million, or $0.08 per share.
    Capital expenditures totaled $16.6 million for the Reporting Period,
which was within the Company's budget for the period and mainly included
progress payments for the construction of the on-mountain resort center
facilities at Yabuli Resort.
    Cash and cash equivalents totaled $24.2 million and working capital was
negative $58.2 million as at March 31, 2009.
    "The first quarter of 2009 was both challenging and rewarding for Melco
China Resorts as we achieved a number of key operational and financial
milestones, despite the current economic conditions," said Graham Kwan, CEO of
Melco China Resorts. "We completed the majority of the construction and opened
our Sun Mountain Yabuli resort to exceptional reviews. Our Beidahu resort
operated above expectations and we were extremely pleased with the successful
events hosted at both resorts. We were also successful in securing Rmb250
million or $46.6 million in debt funding, allowing us to continue to move
forward with our current operations."


    Sky Mountain Beidahu

    Beidahu Resort officially opened for the winter 2008/2009 season on
November 12, 2008, and closed for operations on March 22nd, 2009 for a 131-day
operating season. Revenue at the Beidahu Resort for the period from January
1st, 2009 to March 31st, 2009 was $1.653 million (RMB 9.0 million) with EBITDA
of approximately $300,000 (RMB 1.6 million) or an operating EBITDA margin of
    The Beidahu Resort hosted several major ski events in the first quarter
of 2009, including:

    -   The Junior National Alpine Championships held January 13th to 16th,
    -   The 2nd Annual Asian Mountaineering Championships held February 4th
        to 6th, 2009;
    -   The Chinese National Amateur Alpine Championships held February 21st
        to 22nd, 2009; and
    -   The Chinese National Alpine Championships held March 5th to 8th,

    Sun Mountain Yabuli

    Construction of the on-mountain and resort center facilities at Yabuli
Resort that began in 2007 was substantially completed at the end of 2008. With
the exception of the resort's mountaintop, 20-suite, boutique hotel, the Sun
Mountain Lodge, which is not yet complete due to snowfalls that have hindered
construction access, all other on-mountain systems are fully operational, as
well as the resort center hotels, base area improvements including two five
star hotels, new skier services facilities, new food and beverage outlets,
bars and lounges. However, due to the timing of new bank loans that were
delayed into early 2009, Melco China Resorts was required to delay and manage
progress payments to contractors and suppliers in 2008. As such, while the
redevelopment works were substantially completed in 2008, this delayed the
handover of the property to the resort operating teams, installation of
furniture, and commissioning. Additionally, management delayed marketing and
sales activities for the December and January period until the timing of
payment could be confirmed and at which time the resort had more certainty
over when it would be able to accept guests.
    Yabuli Resort officially opened in late January 2009. Revenue in Yabuli
Resort for the period from January 1st, 2009 to March 31st, 2009 was $915,000
(RMB 5.0 million). The combination of the below events resulted in an EBITDA
of approximately negative $2.0 million (RMB 10.7 million).

    The resort successfully hosted two major events in February 2009:

    -   The China Entrepreneurs Forum held February 8th to 10th with more
        than 350 attendees representing some of Asia's most influential
        business, and government leaders; and
    -   The Alpine events for the Harbin 24th World Winter University Games,
        or "Universiade". The Universiade is an important international
        sporting and cultural festival which is staged every two years in a
        different city.

    Yabuli Resort was closed for operations on Monday April 6th, 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.

    Changchun Resort

    Melco China Resorts generated revenue of approximately $677,000 (RMB 3.7
million) at the Changchun Resort for the period from January 1st, 2009 to
March 31st, 2009, with EBITDA of $178,000 (RMB 1.0 million) or an operating
EBITDA margin of 26%. 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. The
resort hosted a number of events, themed ski days and corporate functions
throughout the winter that aimed to draw traffic from the local market.
    As previously announced in 2008, 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 $4.7 million (RMB 25 million) and is repayable on demand.

    Corporate Developments

    On January 29th, 2009 the Company entered into a third shareholder's loan
agreement with Melco Leisure and Entertainment Group Limited for a loan
facility of US $1.5 million ($1.84 million) which is unsecured, with interest
charged at the 3-month LIBOR plus 3% and with a repayment term of 365 days
from the date of utilization. The entire loan was drawn down on January 29th,
    On March 3rd, 2009 the Company's indirect wholly owned subsidiary,
Heilongjiang Yabuli On Snow Asian Game Village Hotel Co. Ltd., entered into a
loan agreement with China Construction Bank for a loan facility of RMB 250
million ($46.6 million) which is secured against certain land and properties
in Yabuli Resort. Interest charged on the loan is 6.237% per annum with a term
of 7 years with the principal repayment to be repaid by yearly installments
from 2011 until 2016.
    The above funding sources are expected to provide the Company with
sufficient capital to primarily complete and pay contractors for the initial
phase of development at its Yabuli Resort. In addition, the Company is
undertaking a number of measures to reduce its costs and overhead. 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. The ability of the
Company to arrange such financing in the future will depend in part upon
prevailing capital and financial market conditions, as well as upon the
business success of the Company. Historically, the Company has been successful
in obtaining funding and is actively seeking new financing sources, including
via Chinese and foreign banks, shareholder investment and/or loan and
divestment of assets, to meet operational obligations. There can be no
assurance that the Company will be able to arrange such financing. If the
financing efforts are unsuccessful or are not available on acceptable terms
the Company may not have sufficient funds to meet its obligations or on-going
operations and may need to suspend part or all of its operations and consider
other alternatives.

    Financial Highlights
    Summary Financial Results
                                                         For the three-month
    (in thousands of Canadian dollars                           period ended
    except for per share data)                              March 31st, 2009
    Revenue                                                   $        3,245
    Operating expenses                                                (4,727)

    Other income                                                          40
    General & administrative expenses                                 (4,835)
    Depreciation and amortization                                     (2,024)
    Operating loss                                                    (8,301)

    Total non-operating income and expenses                           (3,367)
    Recovery of future income taxes                                       40
    Net loss                                                         (11,628)

    Net loss per share (Basic and Diluted)                             (0.13)

    Weighted average number of shares outstanding (basic
     and fully diluted)                                           87,439,344

    Balance Sheet Key Indicators

    (in thousands of Canadian dollars except for ratios)      March 31, 2009

    Current Ratio(1)                                                  0.43:1
    Free Cash                                                         24,178
    Working Capital(2)                                               (58,240)
    Total Assets                                                     332,560
    Total Debt(3)                                                    181,244
    Total Equity(4)                                                  151,316
    Total Debt to Total Equity Ratio                                  1.20:1

    (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
    (3) Total debt is defined as total current liabilities plus total non-
        current liabilities
    (4) Total equity is equal to the total shareholders' equity

    Melco China Resorts will host a conference call to discuss its year end
operational and financial results. 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

    Date:                    Friday, May 22, 2009

    Time:                    10:00 am Eastern Standard Time

    Dial In Number:          416-340-8018 or 1-866-223-7781

    Taped Replay:            416-695-5800 or 1-800-408-3053
                             (available for 7 days)

    Taped Replay Pass code:  2286437

    Live webcast link:

    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.
    Sun Mountain Yabuli
    Sky Mountain Beidahu

    The TSX Venture Exchange has neither approved nor disapproved the
    contents of this press release.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.


    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
    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:

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