Sunday, October 22, 2006

PUBLISHING & Broadcasting Ltd executives spent Monday putting the finishing touches to plans to spin off the company's media assets, but executive chairman James Packer was not orchestrating proceedings from his Park Street headquarters. Mr Packer was on the Singaporean resort island of Sentosa helping present his consortium's bid to build a $US3.5 billion ($4.7 billion) casino/resort complex on the very spot on which his makeshift office was standing. Physically and metaphorically Mr Packer was in the new world of gambling that PBL is building for itself overseas, while plans were being finalised at home to spin off what his father, the late Kerry Packer, once regarded as the family's crown jewels. Mr Packer has already secured wins in Macau that will completely transform the company even if it loses out to one of the two rivals in contention to build Singapore's second casino resort. PBL, and its Asian partner Melco International, have three casino/resort properties under development in Macau and funding requirements are estimated to be $US3 billion. Just last week PBL transferred the $US900 million licence it acquired early this year to its joint venture with Melco. The licence allows the partners to build and operate as many casinos in Macau as they like, giving them free rein in a market that is expected to overtake Las Vegas this year in terms of gambling revenues. The above figures give some idea of why PBL might need to spin off its media business and build a war chest. But given plans to float part of the Melco venture on the Nasdaq stock exchange for $US1 billion some time next year - and that the venture has been successful at financing the current projects with large amounts of non-recourse bank debt - the media spin-off might indicate there is more in the wings. Broker UBS said yesterday it expected PBL would actively pursue opportunities in other countries that were relaxing their regulatory environment and allowing casinos for the first time. Japan, Thailand, Vietnam and Taiwan are considered to be the most attractive among them.

"A sale of the more mature media assets would give PBL the flexibility to pursue these other options," said UBS analysts Nola Hodgson and Simon Smiles.

"However, if this is the primary motivating factor, we would expect there must be some additional larger-sized opportunities for PBL, as we believe that the group's current balance sheet is comfortably strong enough to fund the already announced plans," they said.