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Melco PBL Entertainment reports results

NEW YORK, Nevada -- (PRESS RELEASE) -- Melco PBL Entertainment (Macau) Limited (NASDAQ: MPEL), a developer and owner of casino gaming and entertainment resort facilities focused exclusively on the Macau market, today reported financial results for the third quarter and nine months ended September 30, 2007.

Lawrence Ho, Chief Executive Officer and Co-Chairman of Melco PBL Entertainment, commented, "The third quarter was a transitional period for Crown Macau as the property became fully activated from late July. Hold adjusted property EBITDA has grown each month during the third quarter, and we are excited by our continued progress in expanding the business. VIP rolling chip volume has shown excellent growth, progressing from US$1.375 billion in July to over US$2.5 billion for the month of October. Based on our estimation for the month of October, Crown Macau's combined VIP and mass table game market share of the whole market was approximately 8%, continuing the positive growth trend and despite the introduction of a major new entrant into the market.

"We are very optimistic that we can continue to drive additional improvement at Crown Macau, as a result of our previously announced reconfiguration of the property to accommodate additional VIP capacity with a commensurate reduction in mass market and slot capacity. This reconfiguration reflects the positive reception Crown Macau has received from the market and complements our competitive advantage in the VIP segment driven by our market leading amenities and strong local relationships with junket operators.

"We believe that this reconfiguration will lead to significantly increased gaming activity at Crown Macau and an expansion of our already strong junket network. Our previously announced Gaming Promotion agreement with Ama International Limited has the potential to meaningfully accelerate this process, largely due to the working capital solution this agreement brings to the property. The physical reconfiguration of the property is scheduled for completion by December 1, and, pending satisfaction of certain conditions, we anticipate that full Ama operations will commence at Crown Macau by year end. Final table mix plans for the reconfiguration of Crown Macau is still being finalised. Following completion of the reconfiguration and based on our current plan, Crown Macau is expected to have approximately 187 VIP gaming tables, 57 mass market gaming tables, and 230 gaming machines."

Company-wide Operating Results

Total revenue, net of rebates paid on rolling chip play, for the third quarter of 2007 was US$113.4 million, up from US$7.3 million in the third quarter of 2006. Results for the third quarter of 2007 include the operations of Crown Macau, which opened on May 12. The year over year revenue increase was driven primarily by the opening of Crown Macau.

Third quarter results also reflect the impact of the acquisition of the gaming sub-concession in September 2006, which resulted in a change in reporting of gaming revenues from the Company's Mocha Clubs from a service fee basis prior to acquisition of the sub-concession, to gaming revenue based on net win after gaming taxes since the acquisition of the sub-concession.

Total group operating costs and expenses were US$159.7 million in the third quarter of 2007, up from US$16.9 million for the third quarter of 2006. The increase was largely attributable to the opening of Crown Macau and the commencement of amortization of the Company's gaming sub-concession, increased amortization of land use rights for projects under development, and increased pre-opening, selling and marketing investment costs associated with the development of Crown Macau and City of Dreams. Pre-opening expense for the third quarter of 2007 was US$3.3 million, mainly associated with the final phase of opening of Crown Macau during July 2007.

Total non-operating income for the third quarter of 2007 was US$0.8 million, including US$1.9 million in interest income and US$1.0 million in net foreign exchange losses. Capitalized interest during the third quarter of 2007 was US$2.0 million.

The Company reported a net loss of US$45.2 million for the third quarter of 2007, compared to a net loss of US$7.7 million for the third quarter of 2006. Net loss per share for the third quarter of 2007 was US$0.037, compared to a net loss per share of US$0.015 in the third quarter of 2006.

Crown Macau 3Q Operating Performance

In the third quarter of 2007, net revenue at Crown Macau totaled US$97.6 million. Prior period comparisons are not available.

Adjusted EBITDA(1) at Crown Macau for the third quarter of 2007 was a deficit of US$10.4 million.

Our expected rolling chip table games hold percentage is 2.7%. In the VIP table games segment, rolling chip volume totaled US$4.8 billion for the third quarter of 2007. Actual rolling chip table games hold percentage (calculated before discounts and commissions) was significantly below expectation at 2.3%. Life-to-date of the property through November 13, rolling chip table games hold percentage is slightly below 2.5%.

In the mass market table games segment, drop (non rolling chip) totaled US$99.3 million and table-hold percentage was 17.4%. The expected range for mass market table games hold percentage is 16% - 18%.

Gaming machine handle (volume) was US$67.1 million and gaming machine revenue was US$4.2 million in the third quarter of 2007.

Total non-gaming revenue at Crown Macau in the third quarter was US$8.1 million. Occupancy in the third quarter of 2007 was 51.9% and the average daily rate (ADR) was US$233 per occupied room.

Mocha Clubs 3Q Operating Performance

Gaming revenue from the Company's Mocha Clubs totaled US$19.8 million in the third quarter of 2007. Revenue for the third quarter of 2006, before the Company had acquired its gaming sub-concession, totaled US$5.7 million in the form of service fees received under the terms of a revenue-sharing service agreement with SJM, where the revenue share was calculated as 50% of net gaming revenues after deduction of Macau gaming tax at 39% of gross gaming revenue. On a pro forma basis (which assumes that the Mocha Clubs had operated under an owned gaming sub-concession during the third quarter of 2006), gaming revenue from the Mocha Clubs was essentially flat year-over-year, despite a reduction in the average number of gaming machines in service in third quarter 2007 as compared with third quarter 2006.

Mocha generated US$5.9 million of adjusted EBITDA(1) in the third quarter of 2007, which compares with US$1.1 million in the third quarter of 2006.

The Company's seventh Mocha Club opened on October 3, 2007 at Mocha Square, a prime location in central Macau. It added approximately 130 gaming machines to our total existing installed base of gaming machines at Mocha Clubs. Additionally, the first phase of a two phase expansion of an existing facility at Hotel Royal opened in November and phase two is expected to open in January 2008. Taking into consideration both of these developments, Mocha Clubs is expected to have over 1,250 gaming machines by the end of January 2008.

In the third quarter of 2007, the number of gaming machines in operation at the Mocha Clubs averaged approximately 980 in six locations versus 1,015 in the third quarter of 2006. Average net win per gaming machine per day increased by 4.3% to US$220 from US$211 as compared with the same period last year. Over the same period, the total number of gaming machines in the Macau market as a whole more than doubled on a year-over-year basis.

Nine Month Results

For the nine month period ending September 30, 2007, the Company reported revenue of US$178.8 million versus US$18.2 million in the nine month period ending September 30, 2006. The year over year revenue increase was driven primarily by the opening of Crown Macau.

The Company reported a net loss of US$141.6 million for the nine month period ending September 30, 2007, compared with a net loss of US$20.5 million for the nine months ending September 30, 2006. The net loss per share for the first nine months of 2007 was US$0.117, compared to a net loss per share of US$0.041 for the year ago period.

City of Dreams Update

City of Dreams is on budget and remains targeted for opening by the end of March 2009. The initial phase opening will include substantially all of the 420,000 square foot casino and approximately 145,000 square feet of retail space, as well as the 370-room Hard Rock Hotel and Crown Towers Hotel, Cotai, with approximately 300 rooms, suites and villas.

The 1,000-room Grand Hyatt Macau hotel is scheduled to open in September 2009, and the 2,000-seat Theatre of Dreams is scheduled for completion in the first quarter of 2009. Opening night is expected before year-end 2009 following four to six months of rehearsals. The approximately 800 unit apartment hotel complex integrated within the City of Dreams footprint is expected to be completed by December 2009 and to be marketed in advance of project completion, subject to compliance with legal and regulatory provisions.

The main podium superstructure works are now over 84% complete and roughly 40% of the hard costs associated with the project have been let to contractors. The Hard Rock hotel tower and Crown Towers hotel tower construction works have both progressed to the 9th floor.

Macau Peninsula Project Update

The Company continues to review and develop its plans for development of the Macau Peninsula project. Those plans are subject to completing the acquisition of the site and certain conditions including meeting applicable Macau regulatory requirements.

Financial Position and Capital Expenditure

Cash and cash equivalents as of September 30, 2007, including restricted cash, totaled US$599.1 million. Total outstanding debt at the end of the third quarter was US$614.3 million, consisting of US$500 million from the draw down of the first tranche of our US$1.75 billion bank facility and US$114.3 million in loans from the Company's two major shareholders. Total debt to shareholders' equity ratio as of September 30, 2007 was 32%.

The Company priced its follow-on public offering at US$15.50 per ADS following market close on Wednesday, October 31. The offering comprised a public offering of 37,500,000 ADSs representing 112,500,000 ordinary shares with each ADS representing three ordinary shares of Melco PBL Entertainment. The Company raised roughly US$580 million in proceeds from this financing before fees.

Capital expenditure for the third quarter 2007 was US$163.6 million, bringing capital expenditure to US$560.2 million for the nine months ending September 30, 2007. Third quarter capital expenditure consisted of US$2.0 million for Crown Macau and US$157.5 million for City of Dreams. Total capital expenditure for City of Dreams in the first nine months of 2007 amounted to US$339.6 million.

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