11:03     MELCO INT'L DEV<00200> - Announcement (11)                          

    The Second Agreement                                                      
    Set out below is a summary of the principal terms of                      
    the Second Agreement:                                                     
                                                                              
    Date   :   11th May 2005                                                  
                                                                              
    Parties   :   Melco Leisure, as assignor and vendor                       
                                                                              
    Melco Entertainment, as assignee and purchaser                            
                                                                              
    Interest to be disposed   :   50.8% interest in the                       
    Joint Venture and entire issued equity of Melco Hotels                    
                                                                              
    Consideration   :   To be transferred in accordance                       
    with the requirements of the Shareholders Agreement and                   
    the Declaration Agreement, in consideration of the                        
    mutual benefits to be derived by Melco and PBL under                      
    the Shareholders Agreement and the reciprocal                             
    covenants of each of them under that agreement.                           
                                                                              
    The Convertible Loan Notes                                                
    Principal Amount   :   HK$1,175 million, equal to the                     
    consideration payable to Great Respect on the                             
    acquisition of its 49.2% interest in the Joint Venture.                   
    Melco will receive the entire principal amount of the                     
    Convertible Loan Notes in the amount of HK$1,175                          
    million on the subscription for the Convertible Loan                      
    Notes by Great Respect.                                                   
                                                                              
    Status   :   General, unsecured obligations of Melco                      
    ranking equally among themselves and pari passu with                      
    all other present and future unsecured and                                
    unsubordinated obligations of Melco                                       
                                                                              
    Maturity   :   Five years from the date of issue                          
                                                                              
    Interest   :   The Convertible Loan Notes do not bear                     
    interest                                                                  
                                                                              
    Conversion   :   The principal amount of the                              
    Convertible Loan Notes is 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, in accordance with the terms of the                      
    Convertible Loan Notes. The conversion price is equal                     
    to the average closing price of the Shares on the five                    
    trading days immediately preceeding the Last Trading                      
    Date. If the conversion rights in respect of the                          
    Convertible Loan Notes were exercised in full at the                      
    initial conversion price, a maximum of 58,956,347                         
    Shares would fall to be issued on exercise of the                         
    Convertible Loan Notes, representing approximately                        
    12.01% of the issued share capital of Melco as at the                     
    date of this announcement and approximately 10.72% of                     
    the enlarged share capital assuming conversion of the                     
    Convertible Loan Notes in full.                                           
                                                                              
    Transfer   :   The Convertible Loan Notes are not                         
    transferable                                                              
                                                                              
    Moratorium on Conversion   :   The Convertible Loan                       
    Notes are not permitted to be converted prior to the                      
    date on which the long term lease in respect of the Land,                 
    for the construction and development of an integrated                     
    entertainment resort, is granted to Melco Hotels by the                   
    Macau Government                                                          
                                                                              
    Redemption   :   The Convertible Loan Notes (if not                       
    already redeemed or converted) will be automatically                      
    redeemed by Melco at maturity (being the fifth                            
    anniversary of their date of issue). The Convertible                      
    Loan Notes may be redeemed, at the option of the holder                   
    of the Convertible Loan Notes, on the occurrence of                       
    certain specified events of default of Melco. In either                   
    case, the Convertible Loan Notes shall be redeemed at                     
    an amount equal to 100% of the principal amount of the                    
    Convertible Loan Notes being redeemed.