Tycoon Lui Che-woo plans to create Macau's first publicly traded gaming company by selling a casino to his group's K. Wah Construction Materials for US$3.3 billion ( HK$18.4 billion). In the deal, K. Wah will buy 97.9% of Galaxy Casino at the Waldo Hotel in Macau, which owns one of three licences in the Chinese enclave, the world's biggest-gaming hub after Las Vegas. The building supplies company, which plans to change its name to Galaxy Entertainment Group, proposes paying shareholders, led by the Lui family, new shares and debt securities.

Galaxy's casino needs funds to compete with Macau tycoon Stanley Ho, Las Vegas Sands Corp and Wynn Resort. Gambling revenues in Macau in 2004 rose 44 per cent to US$5 billion ($6.9 billion) last year as new casinos opened when the city ended Ho's four-decade monopoly.

Analyst Andes Cheng from Couth China Finance & Management said: "Everyone wants to get into Macau's gaming industry now. Asian operators are up against Las Vegas competitors. They need to raise the money to build big casinos that could rival theirs." Lui is taking his casino arm public by a process known as a "backdoor listing" in Hong Kong, in which a privately held part of a group transfers assets into a listed company. The new company's ability to raise funds by selling new shares may be boosted by a rally in Macau-linked stocks. K. Wah's shares have surged 73.5% this year.

Companies in Asia are trying to cash in on a growing gaming market, driven by rising incomes and cheaper travel. Singapore on Monday relaxed a four-decade ban on casinos and is considering 19 bids from companies, including Las Vegas Sands and MGM Mirage, to build two entertainment complexes. During the first two months of this year, Macau's gaming revenue was US$831 million, compared with US$947 million in the Las Vegas Strip.

Lui plans to expand in Macau, the only place in China where casinos are legal, by building the Galaxy Star World and the Galaxy Cotai Mega Resort. K. Wah forecast Galaxy would need just over US$1 billion in the next four years for the expansion. The spending would be financed through debt, stock sales and internal cash, K. Wah said. Shares of K. Wah resumed trading yesterday in Hong Kong, soaring 20 per cent to HK$10.20 yesterday morning. K. Wah plans to issue 1.84 billion new shares at HK$8 each to finance 80 per cent of the Galaxy purchase, which represents about a 6% discount on the March 4 price of HK$8.50, and over 25% discount on yesterday’s price.

By 2007 Macau's gaming receipts would account for 60% of GDP, said Manuel Joaquim das Neves, director of the Gaming Control Board, adding that the economy last year expanded 28% to US$14.3 billion (82.7 patacas). Las Vegas Sands’ Sheldon Adelson aims to fill Macau's Cotai, 4.7sq km of reclaimed land, in seven to 10 years with casino resorts providing 60,000 rooms. K. Wah plans to acquire 73.6% of Galaxy from the Lui family, 17.3% from Guoco Group, and 7% from Pedro Ho, a managing director of Galaxy and resident of Macau. (E-04.20.05)

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