10:59     MELCO INT'L DEV<00200> - Announcement (3)                           

    Melco Entertainment has now also agreed to acquire the                    
    49.2% interest of Great Respect in the Joint Venture,                     
    thereby giving Melco Entertainment a 100% interest in                     
    the right to apply to the Macau Government for a long                     
    term lease of the Land and to subsequently develop the                    
    Land as an integrated entertainment resort.                               
                                                                              
    Acquisition Agreements                                                    
    Melco Entertainment has entered into the following                        
    agreements:                                                               
                                                                              
    1.   The First Agreement, dated 11th May 2005, with                       
    Great Respect and Melco, pursuant to which:                               
                                                                              
    (a)   Melco Entertainment has agreed to purchase and                      
    take an assignment of the 49.2% interest in the Joint                     
    Venture held by Great Respect under the Joint Venture                     
    MOA, for a consideration of HK$1,175 million; and                         
                                                                              
    (b)   Great Respect has undertaken to immediately                         
    subscribe the entire amount of the consideration to be                    
    received by it on completion of the First Agreement for                   
    Convertible Loan Notes to be issued by Melco.                             
                                                                              
    2.   The Second Agreement, dated 11th May 2005, with                      
    Melco Leisure, pursuant to which Melco Leisure will                       
    transfer its 50.8% interest in the Joint Venture and                      
    its interest in Melco Hotels to Melco Entertainment,                      
    in accordance with the requirements of the Shareholders                   
    Agreement and the Declaration Agreement.                                  
                                                                              
    Convertible Loan Notes                                                    
    The Convertible Loan Notes will be issued in the                          
    aggregate principal amount of HK$1,175 million, will                      
    not bear interest and will be convertible into Shares                     
    at an initial conversion price of HK$19.93 per Share,                     
    subject to customary adjustments to accommodate, among                    
    other things sub-divisions and consolidations of the                      
    Shares of Melco. The conversion price has been                            
    calculated as the average closing price of a Share for                    
    the 5 (five) trading days up to and including the Last                    
    Trading Date. The Convertible Loan Notes are not                          
    transferable and are not permitted to be converted into                   
    Shares prior to the date of grant by the Macau Government                 
    to Melco Hotels of the long term lease in respect of                      
    the Land, for the construction and development of an                      
    integrated entertainment resort. Application will be                      
    made to the Listing Committee of the Stock Exchange for                   
    the listing of, and permission to deal in, the Shares                     
    falling to be issued on conversion of the Convertible                     
    Loan Notes. The exercise in full of the Convertible Loan                  
    Notes would result in the issue of an aggregate of a                      
    maximum of 58,956,347 new Shares, representing                            
    approximately 12.01% of the issued share capital of                       
    Melco on the date of this announcement and 10.72% of                      
    the enlarged issued share capital on that date,                           
    assuming full conversion of the Convertible Loan Notes.                   
                                                                              
    If a legally binding long term lease in respect of the                    
    Land for the construction and development of an                           
    integrated entertainment resort is not formally                           
    granted to Melco Hotels by 31st December 2006, then                       
    Great Respect is required to transfer the Convertible                     
    Loan Notes back to Melco, for cancellation, and Melco                     
    is required to pay the proceeds received by it from Great                 
    Respect on subscription of the Convertible Loan Notes                     
    to Melco Entertainment, by way of refund in full of the                   
    purchase price for the acquisition of Great Respect's                     
    interest in the Joint Venture.                                            
                                                                              
    Completion of the First Agreement and the Second                          
    Agreement are subject to the respective conditions                        
    precedent specified in this announcement. Completion                      
    of the First Agreement and the Second Agreement are not                   
    inter-conditional. Completion of the Second Agreement                     
    is not conditional upon completion of the First                           
    Agreement (and the issue of the Convertible Loan Notes                    
    on completion of the First Agreement) or vice versa;                      
    however, it is anticipated that (subject to the                           
    necessary Independent Shareholders approvals having                       
    been obtained and other relevant conditions precedent                     
    having been fulfilled), the Agreements will be                            
    completed at substantially the same time.