MLCO 新濠博亚娱乐

Operator

Good day, ladies and gentlemen and welcome. Thank you forparticipating in the Third Quarter 2007 Earnings Conference Call of Melco PBLEntertainment Limited. At this time, all participants are in a listen-onlymode. After the call, we will conduct a question-and-answer session. Today'sconference is being recorded. I would now like to turn the call over to Simon Dewhurst,Executive Vice President and Chief Financial Officer of Melco PBLEntertainment. Please proceed sir.

Simon Dewhurst

Good morning and thank you for joining us today for ourthird quarter earnings announcement and especially to those of you who’re joiningus early in the morning from G2E in Las Vegas. On the call with me this morning is Lawrence Ho, GarrySaunders, Greg Hawkins, Ted Chan and Jamie Douglas. Please note that today'sdiscussion may contain forward-looking statements made under the Safe Harborprovision of Federal Securities Laws. Please see today's press release under the section SafeHarbor statement for a discussion of risks that may affect our results. We arereporting a bit earlier than we have previously anticipated. We’ve decided toaccelerate our reporting time table in order to move to an open trading windowin our shares for affiliate parties the earliest opportunity following ourequity placement, which is completed at the end of last month. By now, you‘ve had a chance to take a look at the release.So we won’t spend a lot of time reiterating the details of our third quarterresults on the call, which continues to trade the progressive development ofour business. After some brief comments from Garry, we'll open the call up forQ&A. So now I'd like to turn the call over to our Chief OperatingOfficer, Garry Saunders.

Garry Saunders

Thank you for joining us today. We continue to be encouragedby the progress we are making at Crown Macau and believes there is still a considerableamount of additional improvement in volume and profitability as a property andto be executed on our strategy to expand our presence in the VIP market. We believe MPEL’s total market share during the thirdquarter improved sequentially from around 5% in July to 7.5% in August. And ona whole adjustment basis, they were essentially flat through September in spitethe opening of the largest Casino Resort in Macau in late August. I’ll let Simon provide additional detail on the impact oflow table game over on our operations shortly. With the end of the thirdquarter and based on our estimates, our market share performance continues toimprove with our total market share exceeding 8% in October, which isseasonally strong one with golden week. We believe that third and fourth quarters of this year is atransitional periods as we continued the property to accommodate additional VIPcapacity with a commenced rate reduction and mass market in gaming capacity.This reconfiguration is expected to be completed by the end of this month. Last week, we announced that we had entered into a GamingPromotion agreement with Ama International. We are convinced that thisarrangement have the potential to dramatically accelerate our efforts toimprove our market share, and improve EBITDA performance and ROI at CrownMacau. As Crown is the only dedicated VIP property in the marketcapabilities that Ama provides are in perfect set. The key to Ama is notcommission rates but the ability to provide liquidity and working capital toAma’s affiliating gaming collaborators. Junket commissions in Macau are notaffected at the fixed groom junket operator level. A-Max a company affiliated with Ama is in the final stagesof raising its capital, which remains a prerequisite with the commencement ofAma’s operations at Crown Macau. Consequently, we will not get to anydiscussion on the status of this fund raising exercise. Though our agreement with Ama represents a meaningfulacceleration of our strategic focus at Crown Macau, we have continued to signagreements with other junket operators in the market so as to organicallyexpand our market share. To date we have negotiated with over 20 GamingPromotion Agreements at Crown. Overall, we remain very bullish about the prospects at CrownMacau and believe we've a wining strategy for driving the emerging multi nightstay markets with City of Dreams. We remain on the lookout for additionalopportunities at Macau and believe that while it is currently too really tomaking any announcement we continue to be a promising new developmentopportunities that we will pursue on the ongoing quarters. Now I'll turn it back over to Simon

Simon Dewhurst

Thanks Garry. With our recently completed equity offeringand taking together with the liquidity, which we believe will be able togenerate from the monetization of real estate to both City of Dreams and theMacau Peninsula projects we expect that our current development pipeline issubstantially funded and we're in a position financially to review additionalopportunities as they arise. It has been an important part of our development strategythrough 2007, the structure at financing into this position. As we mentioned inour recent fillings with the SEC, Crown Macau experienced unusually low holdsin September of 1.3% and as a result, our pay holds for the first quarter camein at 2.4%, below our 2.7% property hold. Normalizing from new hold, our adjusted EBITDA at CrownMacau, would have been positive U.S.$2.7 million and company wide adjustedEBITDA would have been positive U.S.$3.3 million in the third quarter. While we get started with the Q&A. I would like toremind everybody there our policy is not to give any false guidance and we aregoing to continue with that policy for the indefinite future, which isconsistent with our U.S. listed gaming company. Operator, we are now ready to open the call for question.Thank you.

Operator

(Operator Instructions)

Lawrence Ho

Okay. We’ll take them in the order they are in.

Operator

Thank you. And your first question comes from the line ofGrant Chum with UBS. Please proceed.

Grant Chum

Hi. Good evening everyone. First question is just on thecost structure at the Crown Macau. So, it sounds like you’re saying adjustmentEBITDA of $2.7 million on a revenue base of somewhere over $100 million Isuspect adjusting for the hold. That still looks like a very low EBITDA margingiving the revenue base. Is there more you can do to the cost structure at the Crownto improve that return on revenues? Or is it just the case of waiting for therevenues to really pick-up post the Ama deal to really fix the margin of theCrown?

Greg Hawkins

Hi it’s Greg Hawkins, I'll respond to that. I think itsprobably barred compliance, which you indicated. Obviously, we’re focusing very much on the revenue growth bynature of the potential Ama deal and the ongoing approach to adding more VIPbusiness into the property through a further junk of deals and pushing thatpremium international aspect of the business through our variations with theCrown international network. But very much top-line focus that being said as a relativelynew business moping into a more mature business is opportunity for us to lookat rationalization in productivity of labor and the number of the activitiesacross the property from our life expected in general overview of the coststructure of the business. So I think, primarily focused on significant revenue growth.But in a responsible management teams looking at use of our labor inparticular. When we understand some of the further dynamics of our total demandcoming through and of course on going review with the cost structure that willoccur.

Greg Hawkins

I don’t want to get into breaking down the quarter into theconstituent month. But there is a quite a fatigue gradient in terms of theEBITDA contribution that comes through September as compared with July acrossthe month and not really is as the volume applies leveraged into the propertyduring the course of the three months period. And obviously we are working on astrategy, which substantially expands that going forward from here.

Grant Chum

Okay. And just for house keeping, Greg, how many FTEemployees are their now at the Crown? And how does that number compare withwhen you first open?

Greg Hawkins

We have taken on Board a number of incremental FTEs in thetitle gaming here recently. And I think in preparation for the expanded gamingactivity we anticipate in next three month so kindly we are just over the 40,00FTE labor for the property. About two months ago we were tracking in about 3,700. So inincremental we’re about 2,000 which we see is a directly caller added to anticipatingincreasing the VIP gaming demand coming through.

Grant Chum

Great. That’s very helpful. Thanks.

Operator

Your next question comes from the line of Anil Daswani withCitigroup, Hong Kong. Please proceed.

Anil Daswani

Hi, guys. Just wanted to check with you, if you could giveus some guidance on how things have gone in October and November first andforemost, and clearly there are signs that the horde should have improved,since that horrible month back in September. And secondly with Ama, if all goes smoothly, what is theearliest you think, you’d be able to get, then actually playing at our facilityand generating some revenues that you’ll facilitate? And third, you eluded to this at the very, very beginning.How soon would it be before your parent Melco and PBL can’t prove their SPVactually and start buying shares now that you’ve announced your results?

Simon Dewhurst

Anil, hi. It’s Simon Dewhurst. Just in terms of thesequential improvement that we've seen in the property and strong into Octoberand we've already given some color on that in our prepared remarks at the startof this call. I think, that November seasonally is a weaker month ascompared with October. October, obviously, has golden week in it to the start.And we've seen a little bit of seasonal drop-off as consequence of that. I also think that it will be reasonable for us to assumeinto November, but we should see a little bit of impact, as we go through thefinal stage that we configuration in the property. So, our absolute numbers inNovember, a little bit off, but in terms of the overall trend of the propertywe’re very satisfied with it. And certainly we’re looking forward to engage with anexpanded VIP junket partnership base in the short-term. That leads me on toyour second question when feasibly today and the market in the property at theearliest. The property will be ready till then by the end of this month. I would anticipate even our understanding of settlementsaround their placements plan. That we would see them at the earliest in theproperty around about middle of December of this year. We’re guiding, that wewould expect the (inaudible) by the end of this year. And then to your final question, with regards to the SPV. Iunderstand that the window, trading window rules require for net to be a twofull days of trading and as said window opens from the third day. So that wouldindicate that our earnings across the lines back Friday of this week, but muchbe on that, I can’t possibly comment is what the SPVs plans or aspirationsmight be announced.

Anil Daswani

Thanks very much.

Operator

And your next question comes from the line of Larry Kaufman(ph) with Jefferies. Please proceed.

Larry Kaufman

Close. Hi guys, couple of things. In other way, someone elseask the question but what would be your rolling chip hold, since September 30.As if, you are saying its few points since opening, but is it rolling chip holdmore of the normal numbers for the last month and a half.

Simon Dewhurst

Hi, Larry. Simon Dewhurst, again. I think that again, Idon’t think we want to get into too much specific in terms of fourth quartercover at this stage. But certainly, we’re seeing a reasonably broad volatilityin terms of our hold for month-to-months and that’s to be anticipated. We don’t have a Crown Macau, the stabilizing effect also abalance split between VIP and Max play. In the property, we’re very distorted,very specifically so to the VIP and where volatility tend to exist. We would substantially above theoretical hold in October andNovember sales up from what we’ve seen. We’re back slightly underneaththeoretical. So it’s balancing around and that’s basically what we wouldexpect.

Larry Kaufman

All right. That’s fair. As far as the bad hold and if I’mcalculating it right, if you’ll have two several set at Q3 that cost you about$19 million revenues, which given the high tax rate, would given you about $11million, $12 million more of EBITDA, which means the Crown would have hadpositive EBITDA. Am I doing that right?

Simon Dewhurst

Yeah. I think, you have just come-up with pretty much thenumbers that I gave to you in the opening remark. You’ve got adjusted sideslightly for the differential win between the wins for the revenue share versuscommission base as about another U.S.$ 1million of theoretical addition to yourcalculation.

Larry Kaufman

Okay. If you are talking more like almost $13 million so,okay that’s good as far as the additional junket operator deals’04 for the Amayou’re going give them a higher fees structure return for a large block of VIP.Are you going to be giving any of this other operators higher then the 1% to1.2%?

Simon Dewhurst

I think, actually Larry I think its launched here. I thinkeven on the Ama thing, I think, it’s important to distinct that Ama is actuallynon-junket operator to a junket aggregator. So they are the liquidity providerto all that. And therefore base on our understanding Ama giving, aregiving their own sub-junket operators the same commission rate, which is to 1.2and therefore from -- you maybe if Greg can comment on the deals that we arecontinue to be striking?

Greg Hawkins

Sure. Beyond the IMI as discussed we continue to look forfurther junket another partnership in the VIP segment moving forward. We do nothave any plans to raise anymore the current commission rights we have in themarkets. We’ll be reviewing the models that are applied in terms ofcommission wise versus revenue share that we expect the existing fixture injunket operators and potential junket operators moving forward to beyond thecurrent rate structure we have in place.

Larry Kaufman

All right. And then as far as the Ama goes, what would beyour hope of increase in rolling chip volume from that deals and do you thinkyou can get as much as $80 million to $100 million more of VIP monthly volume?Guys.

Operator

For any interruption, this is the operator. Please standby.

Larry Kaufman

Can you here me? Hello?

Operator

For any interruptions, ladies and gentlemen, the speaker hasdrop the line and they’ll calling in just one moment. Ladies and gentlemen,please standby they’ll be calling in just a moment.

Larry Kaufman

Can you hear me?

Simon Dewhurst

Yes. Start Lawrence.

Larry Kaufman

Yes. I am sorry. As far as the numbers, do you believe thatthey are simply indicating you, they may give you much as $80 to $100 billionmonthly. Is that something you think it's reasonable?

Simon Dewhurst

Larry, again this is Simon. I mean certainly, that there aretwo ways that we can look at this, we can either look at it from our ownbusiness sense perspective and looking what sort of volumes under this type ofbusiness proposal, business structure make sense for Crown Macau. And it is at the level which is substantially less than thevolume that are credited to the junket arrangement for Ama is been asuccessfully standup or signup, alternatively you can look at some point of duediligence that we've done on that. We performed that due diligence over the course of the lastcouple of months on there, and we think that the claims that they make in termsof the volume applied that exit in the market place today that is broughtunderneath this umbrella are credible. And so, on either accounts its positivefrom our perspective.

Lawrence Ho

Larry its Lawrence, I think it’s also very important to notethat, unless the A-Max or Ama achieved our agreed threshold, which are quitebeyond what the market range is. They actually now get their maximum commissionof 1.35 and therefore I think whether as Ama the sub chunked or even I, we’reall motivated and think with regard to our interest.

Simon Dewhurst

Yeah. And if I can just, preamp a follow on conversation, afollow-on question that we’re often asked here. Its focused in an around ananalysis of cannibalization and they don’t see if we fixated on there. There is a significant amount of incremental liquiditythat’s been brought to the market through daily settlement of commission. And Idon’t think that the market is probably comprehended, what impact that willhave in terms of absolutely growing the marketplace. So we don’t see the all of the dollar commitment that existin the underlying agreement is cannibalized from elsewhere and from otherproperty, a substantial portion highly likely will result from the fact theplayers will play more if they given credit.

Larry Kaufman

Okay, that’s that is fair. Another question would be youtold that the City of Dreams and seems like its on time and you gave some timing,you didn’t mentioned the budget does that mean we represent -- remain the same?

Simon Dewhurst

Yes. We’re still operating Larry, on to the joint centers,we’re still operating on time, on budget. It’s a large project, dailychallenges, but we’re very confident on our construction team that we have asthey continue to move this on time and on budget.

Larry Kaufman

All right. Now last thing, I know you guys don’t giveguidance, but almost every company give some basic non-operating numbers andwith this CapEx of fourth quarter and capitalized interest and corporateexpense continue in the third or, just some kind of indication?

Simon Dewhurst

Yes. Quite, frankly, I don’t have any of those numbers forthe fourth quarter on me, but we’ll report those numbers in our fourth quarterearnings.

Larry Kaufman

Right. But a lot of companies give events; on the thirdquarter they give an indication what they think the fourth quarter might be,just for those non-operating numbers?

Simon Dewhurst

Well, as I said, Larry, I don’t have those numbers on me andI’m not going to speculate at this stage.

Larry Kaufman

Okay. That’s fair. Well, thanks a lot guys.

Simon Dewhurst

Thanks, Larry.

Operator

Your next question comes from the line of Bill Lerner withDeutsche Bank. Please proceed.

Bill Lerner

Thanks. Hi, guys. Two questions; one on, can you justcomment on this sort of volume initiative from Crown, properties in Australia,sort of, how is that going? How early is it? What’s kind of, what’s been theexperience? And the other guys is just a harp on Ama for a second. Thereseems to be just blanket concern, frankly without a lot of depth, so I don’tthink anybody knows about them potentially not been able to funded and whatthat mean, so can you just talk up, can you just color than in a little bitobviously, some of that you try to enhance, but how much funding is sort ofneeded, to sort of move to needle for you guys? You know what I mean?

Simon Dewhurst

Bill, I’ll answer your second question first, and then wemight ask for a clarification in terms of your first question, Simon Dewhurstagain. And just in terms of Ama’s fund raising, our understanding is that, theywill be thinking to place and now approved up by the Hong Kong Stock Exchangeto proceed with a placement, that’s in the region of $350 million, $370million. And so, that’s placing aspiration and you’ll understandgiven that I think they’ve either launch today or they’re about to launchtomorrow, there road-show marketing activities around that, that I can’t reallysay any more in terms of what our expectations are with regards to that. Billcan I just ask you to repeat your first question it seems to be related toAustralia.

Bill Lerner

Sure Simon. Yeah, I was just asking, just generally you knowhow is the sort of cross market initiative going and obviously you got the database relationships in Australia and that part of strategy clearly is to bringsome of that volume to Crown early on such I was asking to color that a littlebit?

Lawrence Ho

It’s great. Ho here, I’ll respond to that. It’s progressingpositively. So I wanted the positives which we had in terms of our structure isaccess for those international sales offers which Crown International operateacross you know Southeast Asia. Is that as Crown Macau basically was fullycompleted late July early August that is really the activation time just topush the button on the database access of both customers into Crown Macau. So we are seeing growth in that segment coming through, itsparticular focus for the size of network channeling business of proximity ofCrown Macau to a large number of those customers, but its good in terms ofinbound platform, so we see a fairly more activity into 2008 to provide furtherincentives for those customers, further access opportunities into Crown Macau.So, a solid base with potential for further growth significant growth into ’08.

Bill Lerner

Okay. Thanks guys.

Operator

Your next question comes from the line of Cameron Hight (ph)with JPMorgan. Please proceed.

Cameron Hight

Good day guys. Couple of question if I may; first of all,your hold was relatively low through September with the equity rising nowcomplete, how much of the funds rise are you allocating against, are youallocating at Crown in the event that you have one or two months or even a coupleof quarters where holders relatively low?

Simon Dewhurst

Yes. Hi Cameron it’s Simon. There is no requirement for usto alter any working capital, the existing Crown Macau the consequence of thattrading performance in September or indeed, if we had a few more months thatwere similar in terms of fairly expecting that. So there is absolutely no requirement for us to transferfund that we raised in the placement down into our Bank Lending Group, which iswhere the bank facility fits and where Crown Macau fits.

Cameron Hight

Although if the Ama business comes on Board through Decemberand January and let say at 40 build over all the months, you hold 2.3% isn’t apossible that you could possible also Crown. So, just trying to get an idea of,in your budgeting whether it’s at the corporate or subsidiary level, how muchcapital you believe you need to potentially absorb those losses?

Simon Dewhurst

We hold the capital down after property. But that we’veejected into it and that we will generate through that property. And it's asubsidiary question rather than a holding company question. We do not based onthe forecast that we have done, we do not project a scenario even in thesituations you describe with a quarter of 2.3%. We do not project a scenario where we would be required toplace additional working capital down to that subsidiary level under ourforecast assuming full Imax operations in the property.

Lawrence Ho

Cameron, its Lawrence here, I think obviously, I think thepoint that you head on is absolutely correct that, since Crown Macau is goingto be predominately focused on VIP, there might be volatile months where wemight not even hold 2.cents. We might have negative months for a few months. And I think the secondary offering is important althoughthere are a lending group and holding company subsidiary levels, differentlevel, in terms of where the cash flow is. But I think secondary offeringobviously we did it mainly to fund continental hotels of apartments at City ofDreams for us to pursue new opportunities and offer to complete trinity. I mean the Macau Peninsula Project and to get that fundedand also to give up some dry powder for new opportunities where they arrive inMacau and we do see a few on the horizon and do of course. But in terms toprovide us flexibility is Crown Macau has a few negative points. So, I thinkphilosophically and what point you are talking about.

Cameron Hight

Okay. Great. Thanks. And following on from that, the 2.5bill role you did in October can you give us a sense of how much of that wasdirect and, how much of that 2.5 was associated with any uplift associated withthe Ama deal?

Lawrence Ho

The Ama commences some interim operations in October. Theircontribution to that role in early October was moderate or significant lessthan 10% and reasonably in line with performance of some of the other mid leveljunkets we have.

Cameron Hight

And how much that 2.5 bill was Crown's direct business?

Lawrence Ho

I think Cameron it’s early days and as Greg said it’sprogressing positively. I don't think we're going to break it down intodetails.

Cameron Hight

Okay. I think you disclosed on the last quarterly call Ithink it was 20 to 25% of volumes were direct, so I was just wondering if youcan give us a sense whether that's increased or decreased?

Lawrence Ho

We are holding in absolute terms we're holding it aroundabout the same levels but obviously our overall volumes are growing so...

Cameron Hight

Okay. Sure.

Lawrence Ho

We'll break that out.

Cameron Hight

Okay. Thank very much guys.

Lawrence Ho

Thanks Cameron.

Operator

Your next question comes from the line of Scott Kessler withJanus Capital Group. Please proceed. Mr. Scott your line is open pleaseproceed.

Lawrence Ho

We go to next caller please.

Operator

And your next question comes from the line of Billy fromJPMorgan. Please proceed.

Billy

Hello. Good evening. I just wanted to ask basically what isthe maximum VIP volume, you’re saying Crown can handle under the newconfiguration and will that be anything close to $80 million or do you haveidea or a number that you can share?

Lawrence Ho

I think Billy I think that looking at actual volumes andtrying to turn it into some sort of metric that you can apply in squarefootage, is not something that makes lot of sense to us, given the nature ofVIP play. Obviously, we are back at site, that we will be able toaccommodate the significant growth in VIP play at the Crown Macau. As theresults of the reconfiguration that we’ve undertaken and quite frankly I thinkthat we feel very confident in day that if it grew beyond that we would also beable accommodate that demand. So, we from outside, from an operational point of view, wehear this concern time and time again, we think its some of my uptick itdoesn’t really play into, what we’re actually doing at an operational level.

Billy

And the capacity issue is in many ways, it's relative to thetop of front money and value of the customer base that achieved model as well.So a lower quantity of customers of a higher quality can have a significantimpact from it?

Lawrence Ho

Yeah Billy, it’s Lawrence Ho. I think a lot of people talkabout, the hotel accommodations and the room accommodations, and I'd like toremind you for that within a one minute walking distance of Crown Macau, thereis a older Hyatt Regency that we intent to make use of and then there is also anew sanctuary. So, in aggregate there is about 600 hotel rooms within a oneminute walking distance and we will obviously kind of top tier Crown Internationalnetwork and top tier fund money players with the Crown. And second tier or mid tier people would say diligently andfor that lower tier casual junket people we would love that new entry. So, fromthat standpoint on a hotel accommodation standpoint, we have more than enoughcapacity.

Billy

Thank you.

Operator

Your next question comes from the line of Grant Chum with ofUBS. Please proceed.

Grant Chum

Hi, just a follow-up question on the Ama deal, as far asworking capital is concerned, can you just clarify is it correct to understandthat Ama will actually pay a daily commission, a cycle of daily commission withtheir junkets, coming like 9.9% of that base volume and then settle the balanceat the end of the month. Is that a correct understanding of how that injectionof additional working capital works?

Lawrence Ho

Grant five minutes. Sounds like your understanding of thatsettlement to daily commission is exactly same of ours.

Grant Chum

Okay, great. And second question just a follow-up on largerestaurant and hotel rooms. If the 600 rooms in total, but have you actuallymade, you actually make an arrangement in terms of free booking blocks of roomsand presumably the hotel rooms they are in just for necessary just kept it forthe Crown business or have you actually made specific arrangements with thosehotels?

Lawrence Ho

It's great, we'll continue. Grant, we are certainly awaythat Ama hotel has discussions with Hyatt Regency well with the new centuryhotel, in the sense looking at junket blocks and free bookings of volume movingforward, so we’re across that and a way of integrating that cost.

Grant Chum

Okay. Great. Thanks.

Operator

I show no further questions in the queue. I now like to turnthe call over for any closing remarks.

Lawrence Ho

Okay. Well, thank you very much. And for your attendance onthis call. We look forward speaking to everybody on our fourth quarter call,full year call in approximately three months of time. Thank you.

Operator

Concludes the presentation. And you may all now disconnect.Good day.