Studio City cuts budget for Phase 2
Studio City International Holdings Ltd reduced the project budget of the remaining works at Studio City to approximately USD1.2 billion, the company said in a filing.
As of November 30, 2021, the firm has incurred USD661.2 million in aggregate costs relating to the development of the remaining project, primarily related to the initial design as well as planning and construction costs.
“We have taken various mitigating measures to manage the challenges of Covid-19 outbreaks, such as implementing a cost reduction program to minimize cash outflow of non-essential items and rationalizing our capital expenditure program with deferrals and reductions which benefits our balance sheet,” the group said.
Melco Resorts & Entertainment has announced its strategic partnership with Marriott International, intended to bring the W Hotels Worldwide brand to Studio City Phase 2.
The project is scheduled for opening as part of Studio City Phase 2 in December 2022.
Meanwhile, the firm expects that gross gaming revenues in Macau will continue to be negatively impacted by the significant travel bans or restrictions, visa restrictions and quarantine and social distancing requirements so long as these restrictions remain in place.
Due to the uncertainty presented by Covid-19-related disruptions, the group said, “We are currently unable to reasonably estimate the financial impact on our future results for operations, cash flows and financial condition.”
The filing also confirmed that in December 2021, Melco Resorts Macau ceased all gaming promoter arrangements at the Studio City Casino.
Potential transfer of
Studio City Casino premises
The group believes it would be required to transfer the Studio City Casino premises to the gaming operator to “comply with the requirements of the proposed law, if enacted under its currently proposed terms, in order for the gaming business to continue at the Studio City Casino.”
The proposed amendments to the gaming law are currently under review and pending final approval by the Legislative Assembly.
“In accordance with the proposed law, after a transition period of three years from the effective date of the amending law, gaming activities must be operated by a concessionaire within premises owned by the gaming concessionaire. Otherwise, such premises will revert to the Macau government without compensation upon the concession expiration or earlier termination,” the firm stated.
“We would need to seek an amendment to the terms of the Studio City land grant and complete other administrative procedures which are subject to the Macau government’s consent, approval, and authorization,” it added.
The company said that it will need to comply with the requirements of the proposed law once those requirements are enacted as law and become effective.
However, it remains unclear how this would affect the status of the existing services agreements or the arrangements implemented under such agreements after the three-year transition period.
