Melco Crown Entertainment Strike A Deal With Crown Asia Investments To Buy Back Its Shares

Melco Crown Entertainment Limited

disclosed that it struck a deal with Crown Asia Investments Pty. Ltd. (CAI) by which it would buy back 155.0 million ordinary shares. The company paid $800.84 million as the purchase price, which translated into $5.1667 a share or equivalent to about $15.50 per ADS. The offer price carried a premium of 1.6% to the closing price of ADS of May 3. Melco Crown indicated that it plans to fund the purchase price with the available cash on hand. The company added that the repurchased shares would be canceled in due course after completion of the transaction. Before the deal, CAI owned about 559.3 million shares, or about 34.3%, of its outstanding shares. After the completion of the transaction, CAI would have approximately 404.3 million shares, or approximately 27.4% of the Company. As a result, the shareholding of Melco International Development Limited and public shareholders in the Company would increase to 37.9% and 34.7%, respectively. Crown's Chairman, Rob Rankin, commented about the transaction saying that "Crown is strongly committed to remaining one of Melco Crown Entertainment's major shareholders. This transaction forms part of Crown's ongoing capital management strategy." Similarly, Melco Crown Entertainment chairman and CEO, Lawrence Ho, reacted, "The Company's free cash flow generation and strong balance sheet make this an opportune time for us to complete this transaction, which is consistent with the purpose of our existing share repurchase plan. Crown remains a major shareholder in the Company and we look forward to continuing our relationship." The company indicated that it was expected that after completion of the transaction, James Packer would resign from his position as Co-Chairman and would take up the position of Deputy Chairman of its board of directors. Mr. Todd Nisbet would also resign as a director of the Company. As a result, its board would comprise three Melco nominees, two Crown nominees and four independent directors with Lawrence Ho presiding as Chairman. On Tuesday, the stock shed 0.72%.