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Arnold M. Knightly

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Harrah's rumors in Macau called nonsense

3 Feb 2010

By Arnold M. Knightly

LAS VEGAS, Nevada -- The top executive of a Macau gaming company on Tuesday called rumors of Harrah's Entertainment's investment in his company "total nonsense."

Lawrence Ho, co-chairman and chief executive officer of Melco Crown Entertainment, made the comment in response to a question during the company's fourth-quarter earnings call.

"From our perspective it's total nonsense," Ho said. "Both (Melco Entertainment partner) James (Packer) and myself, and the management teams have really come this far.

"We see a lot of potential growth and the business is ramping up very, very nicely. I think it's really nonsense, all the rumors that we've heard."

Sterne Agee gaming analyst David Bain issued an investors report Thursday saying Harrah's was "acutely interested" in buying a 32.5 percent stake in Melco Crown currently held by Crown Ltd., Australian billionaire James Packer's gaming company.

Bain stood by his report Tuesday.

"In our view, based on discussions with several Macau-based sources, Harrah's remains actively interested in Crown's stake," Bain wrote Tuesday in a note to investors. "The same sources state there has not been a hard offer from Harrah's at this junction."

Bain continued: "Near-term, we are not expecting significant movement one way or another with regard to a potential transaction but believe it is still under discussion."

Bain's initial report said the new chief executive of Macau has asked attorneys to review a potential transfer of ownership of Crown's stake to Harrah's.

Harrah's declined comment Tuesday.

Many challenges remain for Harrah's, Bain said, including the Chinese government's potential reluctance to have a fourth U.S. casino company operating in Macau.

Harrah's, the world's largest gaming company by revenue, has been shut out of the lucrative Macau gaming market while competitors MGM Mirage, Las Vegas Sands Corp., and Wynn Resorts all have hotel-casinos there.

Harrah's owns the Caesars Golf Macau, but is not allowed to develop a casino on that land.

Melco Crown owns the City of Dreams and Altira Macau casinos in the Chinese gaming enclave.

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