De-listing dilemma for Melco Resorts and Entertainment Limited

Asian casino operator Melco Resorts and Entertainment Limited could reportedly soon be de-listed from the Nasdaq bourse under rules adopted by the United States Securities and Exchange Commission in January.

According to a report from GGRAsia, the Hong Kong-headquartered firm behind a trio of Macau casinos was yesterday reportedly placed on the federal agency’s provisional list of foreign companies that are set to be de-listed. The source explained that the revelation saw the value of individual shares in the operator immediately plummet by more than 5.7% to stand at approximately $6.50.

Federal foundation:

Melco Resorts and Entertainment Limited is responsible for Macau’s impressive City of Dreams Macau, Studio City Macau and Altira Macau venues as well as gambling-friendly facilities in Cyprus and the Philippines. However, the company run by billionaire businessman Lawrence Ho Yau Lung is now purportedly facing the real prospect of being de-listed after the United States Securities and Exchange Commission brought in the new regulations for Chinese companies under the domain of the nation’s Holding Foreign Companies Accountable Act.

Auditing argument:

GGRAsia reported that these fresh rules include a stipulation that all firms listed with an American bourse be able to be financially inspected under guidelines issued by the United States Public Company Accounting Oversight Board. The federal agency earlier purportedly determined that Melco Resorts and Entertainment Limited’s auditor, Ernst and Young Hong Kong, did not meet this requirement as it was unable to effectively scrutinize Hong Kong-headquartered companies.

Subsidiary sanction:

The potential expulsion could moreover reportedly impact Melco Resorts and Entertainment Limited’s New York-listed Studio City International Holdings Limited subordinate, which is directly responsible for running the 1,600-room Studio City Macau development. This pair purportedly now have until May 3 to dispute the United States Securities and Exchange Commission’s identification under the Holding Foreign Companies Accountable Act.

Reportedly read a statement from Melco Resorts and Entertainment Limited…

“Both Melco Resorts and Entertainment Limited and Studio City International Holdings Limited have previously disclosed that their auditors, the independent registered public accounting firm that issued the audit report included in their annual reports filed with the United States Securities and Exchange Commission, are in a jurisdiction currently listed as not being able to be fully inspected by the United States Public Company Accounting Oversight Board and thus the identification was expected. Melco resorts and Entertainment Limited and Studio City International Holdings Limited will continue to closely monitor developments and explore options in relation to the Holding Foreign Companies Accountable Act.”

Combination contingency:

Global investments research firm Sanford C Bernstein Limited reportedly used a filing in March to advise investors that there was ‘no near-term risk of any de-listing’ for Melco Resorts and Entertainment Limited. However, the institution purportedly furthermore noted that the casino operator’s inspection problems with the United States Securities and Exchange Commission ‘will need to be resolved’ before the start of 2024.

The filing from Sanford C Bernstein Limited reportedly read…

“Chinese and United States authorities have been in discussion for some time on how to potentially resolve the United States Public Company Accounting Oversight Board audit issue. If no agreement occurs, the solution would be for Melco Resorts and Entertainment Limited to do a listing on the Hong Kong Stock Exchange or to potentially merge with its Hong Kong-listed parent, Melco International Development Limited.”