10:45 MELCO INT'L DEV<00200> - Announcement & Resumption (4) 4. As at the date of this announcement, the respective attributable interests in Great Wonders owned by Melco and PBL are 42% and 28% respectively and the remaining 30% equity interests in Great Wonders are owned by STDM. Subject to the completion of the Third Agreement and the Great Wonders Agreement, the entire issued share capital of Great Wonders will be owned by Melco Entertainment and the respective attributable interests in Great Wonders owned by Melco and PBL will be increased to 60% and 40% respectively. In order to rationalize the shareholding structure for the purpose of strengthening the cooperation between Melco and PBL in the Hospitality Business, Melco has entered into the Third Agreement and the Great Wonders Agreement, with STDM and Melco Entertainment respectively on 17 March 2005, in relation to the acquisition of the remaining interest of the Land held by STDM and injecting the same into the JV Group, details for these two agreements are as follows: THE THIRD AGREEMENT Date : 17 March 2005 Parties : STDM, as vendor Melco, as purchaser Melco Entertainment, as existing holder of 70% equity interests in Great Wonders Interest to be acquired : 30% equity interests in Great Wonders held by STDM Consideration : HK$400 million Term of payment : (i) HK$200 million in cash; and (ii) HK$200 million by way of allotment and issue of the Consideration Shares. Please refer to the paragraph headed "Financing Sources" below for the financing source and settlement of the consideration under the Third Agreement. Basis of determination of the consideration As at the date of this announcement, application has been made by Great Wonders to the Macau Government for the concession of the Land for the purpose of developing a luxury hotel thereon in pursuance of the Hospitality Business. Although the concession of the Land for hotel use has not yet been granted, to the best of the Directors' knowledge, belief and information having made all reasonable enquiries, the Macau Government shall have no objection to the change of usage of the Land from residential to hotel. As such, Melco has commissioned Savills (Hong Kong) Limited, an independent valuer, to re-assess the value of the Land for hotel use and has obtained a preliminary valuation of the Land for hotel use of not less than HK$1,100 million as at 17 March 2005. Melco will include the final valuation report in the circular to be dispatched to the Shareholders. The consideration of HK$400 million was arrived at after arm's length negotiations between Melco and STDM with reference to said revised amount of valuation, and in this regard: - the consideration of HK$400 million for 30% equity interests in Great Wonders represents an approximately 21.21% premium over HK$330 million, being 30% of the valuation of the Land for hotel use of not less than HK$1,100 million as at 17 March 2005 according to the said preliminary valuation; and - the aggregate consideration of HK$556 million paid or payable by Melco under the Land Acquisition Agreements represents an approximately 49.45% discount to HK$1,100 million, being the estimated preliminary valuation of the Land for hotel use as at 17 March 2005; In determining the consideration under the Third Agreement, the Directors also noted that: - by referring to the valuation of the Land for residential use of HK$366 million as at 10 December 2004 conducted by Jones Lang LaSalle Limited, an independent valuer, as disclosed in the circular of Melco dated 5 January 2005, the consideration of HK$400 million for 30% equity interests in Great Wonders (which corresponds 30% interest in the Land) represents an approximately 264.30% premium over HK$109.8 million, being 30% of the valuation of the Land for residential use of HK$366 million as at 10 December 2004 according to the said valuation report;