Melco to acquire equity interest in City of Dreams Mediterranean Project

(PRESS RELEASE) -- Melco Resorts & Entertainment Limited, a developer, owner and operator of casino gaming and entertainment casino resort facilities in Asia, today announces that it has entered into a definitive agreement to acquire from Melco International Development Limited all of Melco International’s holding of ordinary shares of ICR Cyprus Holdings Limited which represents a 75% equity interest in ICR Cyprus. Melco International is the majority shareholder of Melco. ICR Cyprus and its subsidiaries is developing the City of Dreams Mediterranean integrated destination resort project in Cyprus. The City of Dreams Mediterranean project is currently under development and scheduled to open in 2021, upon which it is expected to be the largest and premier integrated destination resort in Europe.

Pursuant to the Share Purchase Agreement, Melco will acquire the Acquisition Shares in exchange for 55.5 million ordinary shares of Melco, which are equivalent to approximately 18.5 million American depositary shares of the Company, or 4.0% of Melco’s outstanding shares as of the date hereof, representing approximately US$375 million to be issued at the closing of the Transaction. The number of Melco Shares to be issued at the closing of the Transaction was determined by dividing the Transaction Consideration by the 20-day volume weighted average price of the Melco Shares immediately prior to the date of the signing of the Share Purchase Agreement.

A special committee of independent directors formed by the Company’s Board of Directors to consider the acquisition unanimously approved the Transaction. The Special Committee engaged independent financial and legal advisors to assist in its evaluation process. The Transaction was also approved by the Audit and Risk Committee of the Company.

The Transaction is subject to customary closing conditions, including the approval by certain Cyprus regulatory authorities, and the execution of a new shareholders’ agreement by the Company, the 25% shareholder of ICR Cyprus and ICR Cyprus. The proposed new shareholders’ agreement contemplates certain commercial and financial arrangements pursuant to which Melco will (i) provide certain corporate-level management services to the ICR Group for a fixed amount of EUR2 million per annum and (ii) have the right to receive an allotment of preference shares in the gaming license-holding subsidiary of ICR Cyprus which will provide the right to a preferential dividend, among other terms. The parties to the Share Purchase Agreement have agreed to use all reasonable endeavors to procure that the conditions to closing of the Transaction are satisfied as soon as practicable and in any event no later than September 20, 2019, or any other date agreed by the parties thereto.

ICR Cyprus, through a subsidiary, holds a 30-year casino gaming license, which commenced from June 2017 and as to which the first 15 years are exclusive. Since being awarded the casino gaming license in June 2017, ICR Cyprus is currently operating one casino and two satellite casinos in Cyprus, the first of which opened in Limassol in June 2018 as the first licensed casino in Cyprus and will continue to operate until the opening of the City of Dreams Mediterranean. ICR Cyprus commenced the operation of two satellite casinos in Nicosia and Larnaca in December 2018 and expects to open two additional satellite casinos in Paphos and Ayia Napa in 2019. Melco International’s historical investment in ICR Cyprus amounts to approximately €165 million. A groundbreaking ceremony for the City of Dreams Mediterranean project took place in 2018 and piling work on the main structure of the City of Dreams Mediterranean project has been completed. Upon completion, City of Dreams Mediterranean is currently expected to have a 7,500-square-meter gaming area comprising over 100 tables and over 1,000 state-of-the-art slot machines, a five-star hotel with approximately 500 rooms, world-class international restaurants and cafeterias, an outdoor amphitheater and MICE and other facilities.