10:49 MELCO INT'L DEV<00200> - Announcement & Resumption (12) 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 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 above and are upon normal commercial terms and in the interest of the Independent Shareholders as a whole. The Directors and the directors of Melco PBL Holdings also 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 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. In case the final valuation of the Land for hotel use to be included in the relevant circular does not exceed HK$1,100 million and hence, the asset ratio as specified in Rule 14.07 of the Listing Rules does not exceed the 100% threshold, the Third Agreement will be reclassified as a major transaction under Chapter 14 of the Listing Rules and Melco will issue a separate announcement in this regard. 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. The Great Wonders Agreement The injection of 30% equity interests in Great Wonders under the Great Wonders Agreement is treated as a deemed disposal of 12% equity interests in Great Wonders for a deemed consideration of HK$160 million by Melco to Melco Entertainment (based on the consideration of HK$400 million payable by Melco to STDM for the 30% equity interests in Great Wonders) under the Listing Rules, which constitutes a discloseable transaction of Melco under Rule 14.06 of the Listing Rules and is subject to the requirements of reporting, announcement and issue of a circular as set out in Chapter 14 of the Listing Rules. GENERAL An independent board committee of Melco comprising its independent non-executive Directors will be appointed to advise the Independent Shareholders on whether or not the terms of the Third Agreement and the transactions contemplated thereunder, including the proposed allotment and issue of Consideration Shares are fair and reasonable and in the interests of the Independent Shareholders as a whole. An independent financial adviser will be appointed to advise the independent board committee thereon. A circular containing, among other things, (i) the principal terms of the Third Agreement; (ii) the principal terms of the Great Wonders Agreement; (iii) the valuation report of the Land; (iv) the recommendation from the independent board committee of Melco in respect of the Third Agreement and the transactions contemplated thereunder; (v) a letter of advice from the independent financial adviser to the independent board committee of Melco in respect of the Third Agreement and the transactions contemplated thereunder; and (vi) a notice of the EGM will be dispatched to the Shareholders within 21 days from the publication date of this announcement.