Melco Resorts Boss to Launch SPAC-based IPO in the US

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The use of a special purpose acquisition company (SPAC) in order to gain access to a public exchange has picked up steam over the past couple years, especially in the gaming industry. It’s how companies like DraftKings, Super Group Holding Co. and others have been able to target a wider pool of investors. A new opportunity has emerged for investors looking to capitalize on the growth of the gambling industry, with Melco Resorts & Entertainment’s boss ready to make a splash on the New York Stock Exchange (NYSE) through a SPAC listing.

Melco Boss Targets the NYSE

According to a filing with the US Securities and Exchange Commission (SEC), Melco’s Lawrence Ho is making plans to launch his Black Spade Acquisition SPAC on the NYSE. The chairman and CEO of the gaming operator hopes to raise at least $150 million through the initial public offering (IPO), but wouldn’t resist if underwriters pushed their allotment up to $172.5 million. The SPAC will be listed under the ticker BSAQ and warrants associated with the offering will be found under BSAQW.

The SEC filing shows that the Melco boss will “pursue an initial business combination opportunity in any industry or any region” It explains that Black Spade would prefer to locate a company that is “related to or in the entertainment industry, with a focus on enabling technology, lifestyle brands, products, or services and entertainment media.” This provides a lot of leeway on what kind of arrangements could be made, which most likely means that the SPAC won’t have to wait long before drawing interest.

Blank Check Ready to be Written

Although Ho doesn’t have a specific target yet for his SPAC, that won’t be an obstacle. There are plenty of gaming companies, as well as companies in all industries, that would jump at the chance to be publicly traded. Finding a suitable candidate for the Black Spade launch should be easy, but Ho is also taking a different approach with the SPAC. He is reportedly going to give priority to Asian companies, which would provide investment opportunities for gaming operators in the region that they have rarely been able to target. Even though legal online casinos and sportsbooks aren’t prevalent in Asia, there is a lot of interest in finding ways to access the large investment pool the US market can offer.

Hopefully, the Black Spade SPAC will have a better run than Melco has had for the past couple of years. It has had financial difficulty for a number of reasons and, in 2019, was forced to delist from the Philippines Stock Exchange. That was followed by increased and unwanted attention to its ties with Crown Resorts, which led to the cancelation of a major shares sale between the two. COVID-19 brought devastation to the company’s revenue in Asia, where it holds a casino license in Macau, as well as in Europe, where it has virtual exclusivity in Cyprus. Casinos in both locations were forced to close for months last year because of the pandemic.

Melco is on the mend and is looking for a brighter future, one that it hopes will involve Japan. The company is among three that have made the final cut to be considered by Yokohama to launch an integrated resort (IR) there, with a decision expected by the end of August. However, the company can’t be overly enthusiastic about the possibilities, given that Yokohama may never see an IR.

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