The project, called City of Dreams, is to be developed in the Cotai reclamation area as a joint venture with Australia's Publishing & Broadcasting Ltd and includes hotels, apartments, shops and a theater.

To help fund its 60 percent share of the project, Hong Kong-listed Melco placed 70 million new shares Tuesday at HK$18.10, according to a person familiar with the capital raising. The price is significantly below the HK$19 level indicated late last week and the stock's last traded price of HK$19.40 before its suspension last Wednesday.

The source said Melco would likely refrain from exercising an option to add 20 million shares to the placement.

Managing director Lawrence Ho declined to discuss fund-raising at a press conference on the project Tuesday except to say the joint venture would use a mix of debt and equity.

A Melco announcement Monday said the joint venture expected to raise HK$2.79 billion in equity and HK$5.18 billion in project financing. As part of the debt portion, Melco is pursuing a HK$1 billion syndicated loan.

Another chunk of cash will come from pre-sale of apartments.

``Right now the property market is so good,'' said chief financial officer Clarence Chung.

The project's 1.5 million square feet of apartments would be spread between two towers. Units from the first tower would be sold next year, said Ho, and based on the result, the company would decide whether to hold units in the second tower for lease or to sell them too, perhaps as time-shares.

``You can see the strong cash flow of this project,'' said Ho.

Galaxy Casino and Hong Kong-listed eSun Holdings are also planning residential developments in Cotai.

Though Melco and PBL said as recently as January they would hold an initial public offering for their joint venture on the Nasdaq Stock Market in the United States by the end of next month, Ho said Tuesday that any such IPO would not happen in the ``near future.''

Melco shareholders are to vote today on a two-for-one stock split.

The partners have hired American architectural firm Skidmore, Owings and Merrill to design City of Dreams. The firm is also handling the master planning for the Cotai Strip group of casino resorts that Las Vegas Sands is developing next to the site of Melco's project, which would mostly be built on land that had been reserved for the expansion of Macao University of Science & Technology.

Though the Hos had previously held back from the race between Las Vegas Sands and Galaxy for casino resorts sites in Cotai, John Alexander, PBL's chief executive and managing director, said it was an obvious direction to go. ``Clearly Cotai is the largest and almost the last major open space in Macau,'' he said. ``We expect Cotai to become the epicenter of Macau gaming.''

zach.coleman@singtaonewscorp.com