10:44 MELCO INT'L DEV<00200> - Announcement & Resumption (2) The Directors (save for the independent non-executive Directors who would reserve their view until receipt of the letter of advice from the independent financial adviser) consider that the terms of the Third Agreement, the payment terms and consideration are fair and reasonable and that they are arrived at after arm's length negotiations taking into account (i) the preliminary valuation made by Savills (Hong Kong) Limited, an independent valuer, in respect of the valuation of the Land for hotel use of not less than HK$1,100 million as at 17 March 2005 and (ii) the confidence of the Directors in the potential prospects of the Hospitality Business mentioned in the paragraph headed "Reasons and benefits for entering into the Third Agreement and the Great Wonders Agreement" contained in this announcement and are upon normal commercial terms and in the interest of the Independent Shareholders as a whole. The proposed allotment and issue of the Consideration Shares will be subject to the approval by the Independent Shareholders (by way of poll) at the EGM. 2. The Great Wonders Agreement Melco has entered into the Great Wonders Agreement with Melco Entertainment, a non wholly-owned subsidiary of Melco within the JV Group, on 17 March 2005, pursuant to which Melco Entertainment will buy and Melco will sell 30% equity interests in Great Wonders to be acquired from STDM for a consideration of HK$400 million, which is identical with the amount of consideration payable by Melco to STDM under the Third Agreement. The completion of the Great Wonders Agreement is conditional upon the fulfillment of the conditions precedent of the Third Agreement and the completion thereof as mentioned in the paragraph headed "Conditions of the Third Agreement" contained in this announcement and it is contemplated that the completions of the Third Agreement and the Great Wonders Agreement shall occur simultaneously. The whole consideration of HK$400 million for the acquisition under the Great Wonders Agreement will be satisfied by Melco Entertainment in cash financing from the internal resources of the JV Group and will be payable upon completion of the Great Wonders Agreement provided that if the concession of the Land has not yet been granted on or before the relevant completion date, then half of the said consideration, namely, HK$200 million will be payable upon the actual date of grant of the concession of the Land by the Macau Government to Great Wonders. It is contemplated that immediately following the completions of the Third Agreement and the Great Wonders Agreement, the respective attributable interests in Great Wonders owned by Melco and PBL will be increased from 42% and 28% respectively to 60% and 40% respectively. The Directors and the directors of Melco PBL Holdings consider that the terms of the Great Wonders Agreement, the payment terms and the consideration are fair and reasonable and that they are arrived at after arm's length negotiations and are upon normal commercial terms and in the interest of the Shareholders as a whole. IMPLICATIONS UNDER THE LIStING RULES The Third Agreement STDM is a connected person for the purpose of the Listing Rules by virtue of the fact that Dr. Stanley Ho, who is the Chairman and Executive Director of Melco, has an equity interest in, as well as being a director of, STDM. As a result, and based on the preliminary valuation of the Land for hotel use of not less than HK$1,100 million as at 17 March 2005, the Land Acquisition Agreements and the issue of the Consideration Shares constitute a possible very substantial acquisition transaction and non-exempt connected transaction of Melco under Rule 14.08 and Rule 14A.16(5) of the Listing Rules respectively (by virtue of the fact that the asset ratio as specified in Rule 14.07 of the Listing Rules may be 100% or more) and are subject to the requirements of reporting, announcement and approval by the Independent Shareholders (by way of poll) at the EGM as set out in Chapter 14A of the Listing Rules. Dr. Stanley Ho, who beneficially owns approximately 3.21% shareholding interest in Melco, and his associates, including Madam Lucina Laam King Ying, Mr. Lawrence Ho, Better Joy and Lasting Legend, will abstain from voting on the relevant resolution(s) regarding the Third Agreement and the transactions contemplated thereunder including the proposed allotment and issue of Consideration Shares at the EGM.