The promoter of a new foreigner-only casino project on Jeju Island, South Korea, has raised KRW40 billion (US$35.4 million) toward the scheme by issuing convertible bonds via a third-party placement.
The funds “will be used for purchasing a Jeju foreigners-only casino licence and working capital,” for the Jeju Dream Tower Integrated Resort project (pictured), said the promoter, Lotte Tour Development Co Ltd.
The non-guaranteed convertible bonds have a three-year duration and carry a zero percent coupon and a 1 percent yield to maturity and conversion price at par of KRW8,300 without any discount. Mirae Asset Daewoo Co Ltd acted as the arranging bank.
The participants were: Timefolio Asset Management (with KRW22 billion); Pine Asia Asset Management (KRW8.5 billion); Shinhan Investment (KRW5 billion), KB Securities (KRW3 billion), and IBK Asset Management (KRW1.5 billion)
The scheme’s promoter said in a prepared statement: “The successful issuance of convertible bonds with an exceptional condition – despite the financial market uncertainty due to North Korea’s nuclear crisis – is a result of high growth potential of Jeju Dream Tower Integrated Resort, which will become a key tourist attraction in Jeju.”
Chinese tourists are likely to be a key target market for the new scheme. It is described as a South Korea-China co-development project in which Lotte Tour Co and China real estate firm Greenland Group are the main partners. China State Construction Engineering Corp is the contractor, supplying what the promoter said was an unconditional completion guarantee with an 18-month line of credit.
Questions have been raised however by investment analysts regarding the status of future investments by Chinese companies in overseas gaming projects, after an announcement on Friday from China’s State Council, the main administrative body of the People’s Republic of China.
Lotte Tour Development said it owns the 750-key hotel, hotel facilities, foreigner-only casino, observation deck, and shopping mall of the site, with those facilities occupying 59 percent of the project’s gross floor area (GFA). Greenland Group is to sell the remaining 41 percent of GFA as an 850-key apartment hotel. Dream Tower Integrated Resort’s GFA is 303,737 square metres (3.27 million sq feet).
The promoter stated Jeju Dream Tower Integrated Resort would have 38 stories, and would be 169 metres (554 feet) high, making it the tallest building in Jeju, and twice as high as the current landmark structure, the Lotte City Hotel, which it said was 22 stories and 89 metres high.
The new resort site is 3 kilometres (1.9 miles) from Jeju International Airport and 7 kilometres from Jeju International Cruise Terminal.
The promoters stated the property would also be only 600 metres away from a downtown shopping zone which they said was visited by more than 4 million Chinese tourists last year.
Construction started in May 2016 and will be completed in September 2019, according to the backers.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia