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Legacy issues

Monday’s cleansing statement also re-states and updates information relating to the deals that led Belle and Melco Crown to become partners in City of Dreams Manila – formerly known as Belle Grande Manila Bay. The venue, still under construction, is located in an area of Manila dubbed by the authorities as Entertainment City.

In general terms, Belle is providing the buildings for the casino project – which is likely to cost a total of approximately US$1.3 billion and be completed over several phases according to some analysts. Melco Crown is responsible for the fixtures and fittings, and gaming operations management.

The casino licence was initially issued in 2008 by the country’s casino regulator, the Philippine Amusement and Gaming Corp (Pagcor), to a group of companies controlled by the Sy family. It was eventually put under Belle’s control in 2011.

PLAI will after City of Dreams Manila opens receive a monthly payment from a Melco Crown unit called MCE Leisure (Philippines) Corp. The fee will be based on mass market and VIP gaming revenues at the property. The latest filing didn’t specify a date when the opening will be, but investment analysts expect the first phase launch to be either the fourth quarter of 2014 or first quarter of 2015.

Monday’s filing adds: “MCE Leisure may be required to make a further payment to PLAI at the end of every 24-month period if revenues from the project’s net VIP gaming revenues (after certain deductions) are greater than 5.0 percent of the VIP EBITDA [earnings before interest, taxation, depreciation and amortisation] payments being made to PLAI…”

PLAI is obliged to pay AB Leisure a fee equivalent to 30 percent of any monthly payment received from MCE Leisure, less a royalty based on the project’s gaming revenues, states the filing.

It adds: “As PLAI’s 100 percent parent, the company [Sinophil] is entitled to receive all of the economic benefit of payments that PLAI receives once gaming operations begin at the project. However, the company and PLAI have limited control and influence on the operations of Melco and the project.”

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