September 14

In China, it is reported that Melco International Development Ltd., the Hong Kong based company run by Macau gambling tycoon Stanley Ho and his son, will buy a one-half share in a planned hotel and casino from Ho for the equivalent of $13 million in US dollars, which converts to approximately $100 million local money.

Melco, the company that runs an investment bank and also develops real estate, proposes paying for the casino with a five-year bond that has the ability to convert into as many as 25 million Melco shares, this amount is equal to a 6.6 % stake in the company, at the price of $4 each (local money). Melco will then pay the 4% interest the bond incurs each year.

Macau is the only area of China that allows development of casinos, and Ho has been enlarging his business there, ever since there has been increased competition after the former Portuguese colony ended his 42-year monopoly in 2002, awarding licenses to Las Vegas billionaires Steve Wynn and Sheldon Adelson.

Melco will buy the 50 percent stake in the project from Sociedade de Turismo e Diversoes de Macau, a closely held company through which Ho owns his gambling interests. Melco did not comment as to who the owner of the other half of the project was.

The $100 million Melco plans to spend on the deal will pay for half the cost of land for the hotel in Macau. The whole project will cost about HK$1.5 billion and will be financed by some combination of borrowing or new share sales, Melco said. It is not yet known when the purposed property will be completed.

Ho, chairman of Melco, and his son Lawrence, who is the managing directorof Melco, will not vote at the meeting that will vote on the proposed purchase and sale of the bonds.