11:06     MELCO INT'L DEV<00200> - Announcement (17)                          

    BASIS OF DETERMINATION OF PURCHASE PRICE FOR THE                          
    ACQUISITION AND CONVERTIBLE LOAN NOTES CONVERSION                         
    PRICE                                                                     
    A long term lease in respect of the Land for the                          
    construction and development of an integrated                             
    entertainment resort having the features described                        
    above, once granted, has been valued in the preliminary                   
    report of Savills (Hong Kong) Limited, an independent                     
    valuer, at approximately HK$4,506 million on an open                      
    market basis and on the basis of generally accepted                       
    valuation methodologies. The purchase price of                            
    HK$1,175 million for Great Respect's 49.2% interest in                    
    the Joint Venture has been arrived at after arm's length                  
    negotiations among the parties (including the                             
    representatives of PBL on Melco Entertainment's board)                    
    including by reference to that preliminary valuation                      
    report. The purchase price of HK$1,175 million for                        
    Great Respect's 49.2% interest in the Joint Venture                       
    represents a significant discount to 49.2% of the open                    
    market value of the Land, as determined in the                            
    preliminary valuation report of Savills (Hong Kong)                       
    Limited (an independent valuer). Shareholders are                         
    advised to note that the valuation report prepared by                     
    Savills (Hong Kong) Limited referred to in this                           
    paragraph is a preliminary report and is referred to                      
    in this announcement only in order to satisfy the                         
    disclosure requirements of the Listing Rules.  Details                    
    of the final valuation report will be set out in the                      
    circular to be sent to Shareholders in full compliance                    
    with Rule 11 of the Takeovers Code. The purchase price                    
    of HK$1,175 million for Great Respect's 49.2% interest                    
    in the Joint Venture has been unanimously approved by                     
    the board of directors of Melco Entertainment,                            
    including the directors appointed by PBL.                                 
                                                                              
    The Joint Venture has not been formally granted the long                  
    term lease in respect of the Land, or entered into any                    
    legally binding agreement to be granted such a long term                  
    lease in respect of the Land. Accordingly, as set out                     
    above, the net asset value of the Joint Venture is                        
    currently zero. It is expected that, in the ordinary                      
    course of events (and subject to the requisite                            
    Shareholders' approvals having been obtained), the                        
    long term lease of the Land will be granted to Melco                      
    Hotels in accordance with the offer from the Macau                        
    Government, as accepted in principle by Melco Hotels.                     
    Accordingly, the purchase price of HK$1,175 million for                   
    Great Respect's 49.2% interest in the Joint Venture has                   
    been arrived at after arms length negotiations among                      
    the parties. The purchase price of HK$1,175 million for                   
    Great Respect's 49.2% interest in the Joint Venture                       
    represents a significant discount to 49.2% of the open                    
    market value of the Land, as determined in the                            
    preliminary report of Savills (Hong Kong) Limited the                     
    independent valuer as referred to above.                                  
                                                                              
    The transaction under the First Agreement has been                        
    structured so that if Melco Hotels is granted a long                      
    term lease in respect of the Land (as is expected in                      
    the ordinary course of events), the consideration paid                    
    by Melco Entertainment to Great Respect reflects (but                     
    is at a significant discount to) the open market value                    
    of the Land which Melco has thereby been able to obtain.                  
    Conversely, if, for any reason, Melco Hotels is unable                    
    to obtain a long term lease in respect of the Land                        
    (including both "Parcel A" and "Parcel B") by 31st                        
    December 2006, the transaction has been structured so                     
    that Great Respect will receive no consideration for                      
    the transfer of it 49.2% interest in the Joint Venture                    
    to Melco Hotels. This is achieved by the following                        
    means:-                                                                   
                                                                              
    -   the Convertible Loan Notes are non-interest bearing                   
    and are not repayable for five years;                                     
                                                                              
    -   the Convertible Loan Notes are not transferable;                      
                                                                              
    -   the Convertible Loan Notes cannot be converted                        
    prior to the date on which Melco Hotels is granted the                    
    long term lease in respect of the Land (being both of                     
    "Parcel A" and "Parcel B" referred to above);                             
                                                                              
    -   if, for any reason, a long term lease in respect                      
    of the Land is not granted to Melco Hotels by 31st                        
    December, 2006, Great Respect is required to surrender                    
    the Convertible Loan Notes to Melco for cancellation.                     
    As a result, Great Respect will have received no                          
    consideration for the transfer to Melco Hotels of its                     
    49.2% interest in the Joint Venture;