Melco International's $98M Boost from Rights Issue

Melco International Development Ltd has successfully raised a substantial amount from a recent rights issue, pocketing nearly HKD770.8 million (approximately US$98.2 million) in net proceeds post expenses. The company, which operates as the parent firm to Melco Resorts & Entertainment Ltd, launched this financial maneuver as part of its strategy to manage its financial obligations. Melco Resorts is well-known for its casino operations in several key locations, including Macau, the Philippines, and Cyprus, and is soon to establish a new presence in Colombo, the capital of Sri Lanka. This move comes amidst a challenging financial landscape, as highlighted by its recent prospectus.

Utilization of Raised Capital: Focus on Debt Management

A significant portion of the funds raised, amounting to just over half of the net proceeds, has already been allocated to offset existing debt under a shareholder loan agreement. In April, the company had borrowed HKD451.8 million from entities associated with its chairman and CEO, Lawrence Ho Yau Lung. This particular loan was unsecured, carried an annual interest rate of 11%, and was structured to mature by October next year.

The recent capital injection from the rights issue allowed Melco International to alleviate some financial pressure by addressing this shareholder loan, highlighting the company's proactive stance in managing its debt. The company had indicated in its prospectus from late May that its decision to pursue a rights issue was influenced by limited options for debt financing in today's market.

Future Financial Plans: Strategic Use of Remaining Proceeds

Following the settlement of a portion of its shareholder loan, Melco International now has a remaining balance exceeding HKD380.8 million. As per the company's filing on Monday, these funds are earmarked for prepayment on both principal and interest for the company’s 2021 credit facilities. This specific credit facility, agreed upon in June 2021, amounts to US$1 billion with a five-year term. The rights issue itself was quite successful, with nearly 94.4 percent of the available rights shares being allotted to existing shareholders. The terms offered were one new rights share for every two existing shares at an attractive subscription price of HKD1.0286 per share. This capital management strategy not only demonstrates Melco International's commitment to strengthening its financial health but also showcases its ability to navigate complex market conditions effectively.

Source: US$98mln raised via Melco Int rights issue, going toward shareholder loan and credit facilities, GGRAsia, June 17, 2025.

Posted by Wizard
Jun 18 2025