PY completes Macau casino acquisition

Macau 16 Feb 2013
PY completes Macau casino acquisition

PY Engineering is set to become a casino property investor with a luxury hotel and casino project to be built at Cotai Strip in Macau.

Hong Kong listed Paul Y Engineering (0577) has raised HK$3.2 billion and completed the acquisition of a company for its proposed luxury hotel and casino project in Macau.

In a recent press release, the contractor said it had successfully placed over 2.9 billion shares worth HK$1.998 billion and issued 12-year convertible bonds worth HK$1.202 billion to “not less than six placees”.

The issued share capital of Paul Y is now about 3.55 billion shares after the placement of the shares.

If all the convertible bonds, which are convertible anytime up to its maturity date, are converted into shares the issued share capital will surge by nearly 50 percent to 5.31 billion shares.

The money raised by the share placing and convertible bonds was used to buy a company, Falloncroft Investments, which owns a piece of land in Cotai Strip in the former Portuguese enclave of Macau.

“Falloncroft has exclusive contractual rights in respect of a 65,000 square feet land parcel located on the Cotai Strip in Macau, on which a 945,000 square

feet super luxury exclusive hotel, casino and retail complex is proposed to be built,” Paul Y said in the press release.

Construction is due to start this year for completion and opening for business in 2016.

In a stock exchange notice last November, Paul Y and its parent company PYI Corporation (0498) proposed to diversify into property investment by entering into the hotel and gaming industry in Macau.

To that end it proposed buying Falloncroft, a company that owns the land and also has an MOU with one of the affiliates of the gaming concessionaires to manage and operate the casino upon completion.

The name of the gaming concessionaire or sub-concessionaire has not been disclosed although the stock exchange notice said the gaming operator was listed on the Hong Kong Stock Exchange.

These six listed casino operators are SJM Holdings (0880), Wynn Macau (1128), Galaxy Entertainment (0027), MGM China (2282), Melco Crown Entertainment (6883) and Sands China (1928).

Paul Y Construction (Macau), a subsidiary of Paul Y Engineering, will act as design-build manager during construction of the project, of which the total development budget is estimated at HK$6.5 billion.

A valuation report by Colliers International included in the notice estimated the market value of the land, based on a residual valuation, at HK$2.118 billion.

For construction cost, a report by quantity surveyors Rider Levett Bucknall estimated total construction cost at HK$2.603 billion.

As to the market value of the completed project, a valuation report also by Colliers estimated it to be at HK$8.088 billion.

On completion, the gross floor area (GFA) above ground would total 74,300 square metres (799,765 square feet) with a basement of 13,500 square metres (145,314 square feet) plus a refuge floor of 1,780 square metres (19,160 square feet).

The five star hotel will have GFA of 54,255 square metres (584,005 square feet) while the casino with 66 table games and 150 slot machines will have a GFA of 8919 square metres (96,000 square feet).


Danny Chung




← MGM China to start work on Cotai casino

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