Asian casino operator and developer Silver Heritage Group Ltd has increased by one-third the budget on its under-construction Nepal gaming resort near that country’s border with India.
It has also pushed back the completion timetable for the project to later in 2017, and has started a capital raising exercise – “the details of which are still being finalised” – to cover the increased costs.
The firm said in a Thursday filing to the Australian Securities Exchange that the revised construction budget for Tiger Palace Resort Bhairahawa (pictured in an artist’s rendering) was now AUD70.3 million (US$53.8 million).
Silver Heritage stated the sum represents an increase of AUD18.0 million or 34.5 percent, on the company’s project budget as announced on June 30 last year. The latter number had been used for the purposes of the firm’s initial public offering in August.
“Once the capital raising exercise is completed, management expects that the construction of Tiger Palace will be fully funded,” said the document.
In addition to the increase to the budget, Silver Heritage will require a further US$1 million as working capital float for Tiger Palace according to the filing.
The company’s shares will remain in voluntary suspension on the Australian Securities Exchange until the details of the capital raising are completed, added Thursday’s filing.
In a presentation to investors issued the same day, seen by GGRAsia, Silver Heritage said it would need to raise US$14.8 million in new capital to complete the project, including the additional US$1 million as working capital.
The investor presentation noted: “Construction of Tiger Palace Resort Bhairahawa has made good progress [with] infrastructure 90 percent complete, hospitality 80 percent complete, [and] casino and public areas 60 percent complete.”
The document added: “Opening [is] to be in stages from August 2017 – for the hotel – to [the] resort and casino grand opening in November 2017.”
The company had previously mentioned the possibility of a soft opening in February for the first stage of the resort.
Thursday’s filing said that the additional AUD18.0 million costs included: AUD9 million for fit-out of hospitality, casino and hotel public areas, due to factors including “concerns over quality of locally produced product”; AUD4 million for construction of hospitality, infrastructure, casino and hotel public areas, affected by factors including “variations to original plans, in particular to casino and public areas”; AUD3 million in pre-operating expenses, factoring “costs associated with completion delay”; and AUD2 million for contingency costs for any “unforeseen events, delays and other increases in budget”.
Silver Heritage additionally stated in its filing that other factors influencing the budget increase included: issues and costs arising from managing local contractors; unanticipated delays in obtaining approval from the Nepal Central Bank to raise the equity ceiling of the local – investing – subsidiary company, which it said affected the ability to remit money into Nepal to pay construction costs; and what had previously been “inefficient project management and site management and reporting”.
In the February 27 filing announcing suspension of its stock, Silver Heritage had said the Nepal casino project faced “unanticipated delays” that could mean a later opening date and higher costs.
In a March 10 filing, the firm said Hugh Holmes, previously executive director for special projects, had resigned from the board and ceased involvement in the project. It added a new management team had been installed, led by casino industry veteran Adam Titus, whose recent resume includes work on MGM Macau and Okada Resorts in Manila, in the Philippines.
The Tiger Palace Resort site is close to Nepal’s border with the Indian state of Uttar Pradesh, which does not offer legal casino gambling.
Thursday’s investor briefing said the airport at Bhairahawa – currently serving Nepal domestic flights – would be upgraded to an international hub by June 2018, and that on the Indian side of the border an airport in Gorakhpur – currently for domestic Indian services – was presently being upgraded, and would include a “welcome centre and lounge for Tiger Palace customers”.
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”We do not believe that reopening the advance notice nomination deadline [for board directors] is appropriate or justified”
Daniel Boone Wayson
Chairman of the Wynn Resorts board of directors