09:34 MELCO INT'L DEV<00200> - Announcement (7) IMPLICATIONS UNDER THE LISTING RULES 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 proposed Annual Cap(s) at the EGM. 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 Service Arrangement and the transactions contemplated thereunder, including the proposed Annual Cap(s) 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 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 As at the date of this announcement, the Board comprises three Executive Directors, namely, Dr. Stanley Ho, Mr. Lawrence Ho and Mr. Frank Tsui, two Non-executive Directors, namely, Mr. Ng Ching Wo and Mr. Ho Cheuk Yuet and three Independent Non- executive Directors, namely, Sir Roger Lobo, Mr. Robert Kwan and Dr. Lo Ka Shui. DEFINITION In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: "Additional Site" the new slot hall of SJM located at Hotel Taipa Square in Macau "Annual Cap(s)" the relevant cap amount for all transactions contemplated under the Service Arrangement to be received by Mocha Slot from SJM for each of the three financial years of Melco ending 31 December 2007 "associate" has the same meaning as ascribed to it in the Listing Rules "Better Joy" Better Joy Overseas Limited, a company owned as to 77% by Mr. Lawrence Ho and as to 23% by Dr. Stanley Ho "Board" the board of Directors "connected person" has the same meaning as ascribed to it in the Listing Rules "DICJ" Gaming Inspection and Coordination Bureau, the gaming authority within the Macau Government "Director(s)" the director(s) of Melco "Dr. Stanley Ho" Dr. Ho Hung Sun, Stanley, the Chairman and an Executive Director of Melco