10:45 MELCO INT'L DEV<00200> - Announcement & Resumption (5) - the aggregate consideration of HK$556 million paid or payable by Melco under the Land Acquisition Agreements represents an approximately 52% premium over HK$366 million, being the valuation of the Land for residential use as at 10 December 2004; - the amount of HK$100 million previously paid by Melco for 50% equity interests in Great Wonders pursuant to the First Agreement represented an approximately 30.55% discount to HK$144 million, being 50% of the valuation of the Land for residential use of HK$288 million as at 5 August 2004 as disclosed in the circular of Melco dated 11 October 2004; and - the amount of HK$56 million previously paid by Melco for additional 20% equity interests in Great Wonders pursuant to the Second Agreement represented an approximately 23.5% discount to HK$73.2 million, being 20% of the valuation of the Land for residential use of HK$366 million as at 10 December 2004. After a preliminary discussion between Melco and the new valuer, Savills (Hong Kong) Limited, the main reasons for the substantial increase in the present preliminary valuation of the Land of not less than HK$1,100 million as at 17 March 2005 as compared with the previous valuation of HK$366 million conducted by Jones Lang LaSalle Limited as at 10 December 2004, include (i) change of use of the Land from residential to hotel; and (ii) the continuing rise in the property market in Macau, in particular, the value of hotel property. Notwithstanding that the consideration payable by Melco under the Third Agreement is considerably higher than the respective considerations paid under the First Agreement and the Second Agreement, 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 the amount of consideration is fair and reasonable taking into account (i) the abovementioned preliminary 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 and the fact that the acquisition of 30% equity interests in Great Wonders under the Third Agreement and the injection of such interests into the JV Group under the Great Wonders Agreement will serve the purposes of rationalizing the shareholding structure in the JV Group and strengthening the cooperation between Melco and PBL in pursuing the Hospitality Business as mentioned in the paragraph headed "Reasons and benefits for entering into the Third Agreement and the Great Wonders Agreement" below. Financing sources The consideration of HK$400 million for the acquisition under the Third Agreement will be satisfied by Melco, as to HK$200 million, by way of cash payment upon completion and as to the balance of HK$200 million, by way of issue of 11,111,111 Consideration Shares at an issue price of HK$18.00 per Share to STDM upon completion or the actual date of the grant of the concession of the Land by the Macau Government to Great Wonders, whichever is later. The cash consideration of HK$200 million payable by Melco to STDM will be financed from the internal resources of Melco. As it is contemplated that the completion of Third Agreement will occur simultaneously with the completion of the Great Wonders Agreement, it is expected that Melco will receive the same amount of sales proceeds from Melco Entertainment upon the relevant completion date. The issue price of each Consideration Share is identical to the closing price of HK$18.00 per Share as quoted on the Stock Exchange on 17 March 2005 prior to the suspension of trading in Shares on 18 March 2005 and represents a premium of approximately 0.17% over the average closing price of HK$17.97 per Share for the five trading days up to and including 17 March 2005. Based on the closing price of HK$18.00 per Share on 17 March 2005, the Consideration Shares had a market value of approximately HK$200 million. In addition, the issue price of each Consideration Share represents a premium of approximately 894.48% over the net asset value per Share of approximately HK$1.81, based on the audited consolidated net assets of Melco as at 31 December 2003 and the then Shares in issue.