09:32 MELCO INT'L DEV<00200> - Announcement (1) The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. This announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of Melco. Melco International Development Limited (Incorporated in Hong Kong with limited liability) Website: http://www.melco.hk.cn (Stock Code: 200) CONTINUING CONNECTED TRANSACTION Financial adviser to Melco International Development Limited VC CAPITAL LIMITED (A wholly-owned subsidiary of Value Convergence Holdings Limited) SUMMARY The Directors are pleased to announce that Mocha Slot, a non wholly-owned subsidiary of Melco within the JV Group, has entered into the Service Arrangement comprising four agreements with identical terms respectively dated 21 March 2005 and 22 March 2005 with SJM for the provision of certain Services in relation to the operation of certain slot halls of SJM in Macau. Details of the Services to be provided by Mocha Slot are set out in the sub-paragraph headed "Services to be provided" in the paragraph headed "The Service Arrangement" contained in this announcement. Pursuant to the Service Arrangement, Mocha Slot will receive a monthly service fee representing 31% of the aggregate gross income of all the electronic gaming machines installed in the relevant slot halls. 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 Service Arrangement are fair and reasonable and that they are arrived at after arm's length negotiations and are upon normal commercial terms, in the ordinary and usual course of business of Melco and in the interest of the Independent Shareholders as a whole. In view 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, the parent company of SJM, SJM is a connected person of Melco for the purpose of the Listing Rules. Since the transaction under the Service Arrangement involve provision of services which shall be performed on a continuing or recurring basis and is expected to extend over a period of time and by virtue of the fact that some of the relevant percentage ratios (other than the profit ratio) as specified in Rule 14.07 of the Listing Rules on an annual basis are more than 25% and the anticipated Annual Cap(s) of consideration exceeds HK$10,000,000, the Service Arrangement constitutes a non-exempt continuing connected transaction for Melco under Rule 14A.35 of the Listing Rules and is 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 Service Arrangement and the relevant Annual Cap(s) at the EGM. A circular containing, among other things, (i) the principal terms of the Service Arrangement; (ii) the recommendation from the independent board committee of Melco in respect of the Service Arrangement and the transactions contemplated thereunder, including the proposed Annual Cap(s); (iii) a letter of advice from the independent financial adviser to the independent board committee of Melco in respect of the Service Arrangement and the transactions contemplated thereunder; and (iv) a notice of the EGM will be dispatched to the Shareholders within 21 days from the publication date of this announcement.