Hong Kong-listed Melco will acquire a 40 percent interest in the PBL subsidiary that will own the subconcession, PBL executive chairman James Packer said. At the same time, the two partners restructured their earnings agreement for existing projects.

The subconcession purchase will be funded by US$400 million equity and the rest in bank loans. Of the equity, PBL's share is US$240 million while Melco's share is US$160 million. The purchase requires Macau government approval, according to a statement by the Australian company.

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Melco, run by Ho's son, Lawrence Ho, and PBL set up a joint venture, Crown Macau, in November 2004 to enter the casino industry after the government of the former Portuguese enclave ended the monopoly held by Stanley Ho's Sociedade de Turismo e Diversoes de Macau in 2002.

Concessions to own and operate hotel casino resorts were initially awarded to Wynn Resorts, Galaxy Casino and Ho's Sociedade de Jogos de Macau. A venture comprising MGM Mirage and Ho's daughter, Pansy, then acquired a subconcession from SJM, while Las Vegas Sands won the Galaxy subconcession.

PBL is still discussing the loan with banks, Packer said, and no timetable was given. Melco group public relations manager Maggie Ma declined to comment on the deal, citing Hong Kong stock exchange rules. The stock was suspended from trading Monday.

Under a change to their partnership agreement, the two partners will share returns from their projects 50:50. At the same time, SJM "has waived all rights" under the existing joint venture to Crown Macau, a hotel and casino on Taipa Island, and City of Dreams, a casino resort on the reclamation area of Cotai Strip, Packer said.

The new arrangement will "allow a more flexible and robust operating structure" for Crown's two projects. Packer said. Previously, Melco had 60 percent share if the project were in Greater China and 40 percent if the project were in other countries.

The restructuring will boost Melco earnings, according to UOB Kay Hian analyst Peter Drolet. "It means they are going to retain a far higher percentage of gaming receipts than they were paying to SJM," Drolet said.

Under their existing arrangement, SJM took a share of gambling receipts after tax, which meant Melco had an "effective 18 percent of the gaming receipts." Drolet said: "With this new deal, that moves up and the new percentage will be 27 percent."