Hong Kong-listed real estate developer Lippo Ltd has given some commentary in its 2016 interim report – filed on Thursday – regarding its decision to seek disposal of its interest in a South Korean real estate project involving U.S.-based casino firm Caesars Entertainment Corp.
It was “in light of current outlook for the gaming industry in North Asia and the volatility of the global economy,” stated Lippo.
The scheme on land at Incheon, near Incheon International Airport – a major regional air hub serving South Korea’s capital Seoul – involves a foreigner-only casino.
Investment analysts regard China as an important source market for players at South Korea’s foreigner-only casinos. But recently there have been media reports suggesting China might be seeking to moderate the outflow of Chinese currency into South Korea and other casino jurisdictions in the Asia Pacific region.
“Whilst it was anticipated the exit agreement would be entered into within November 2016, the exit negotiations are continuing, and their outcome is dependent upon a separate set of negotiations between Caesars Korea and the [alternative] investor,” noted Lippo’s interim report.
On December 5, the alternative investor was identified as R&F Properties (HK) Co Ltd, a subsidiary of mainland China real estate developer Guangzhou R&F Properties Co Ltd.
In a filing on December 6, Lippo said it was still negotiating the disposal of its stake in LOCZ Korea Corp, the firm responsible for the development, construction and operation of the yet-to-be-built casino resort.
The other partners in the LOCZ Korea consortium include Caesars Korea Holding Co LLC, a firm wholly owned by Caesars Entertainment, and OUE International Holdings Pte Ltd, a company that is wholly owned by Singapore real estate firm OUE Ltd. Lippo is the latter’s controlling shareholder.
Lippo noted in its Thursday filing that a memorandum of implementation for the disposal – signed in August 2016 – “did not create legally binding obligations on the parties” but did require the approval of South Korea’s Ministry of Culture, Sports and Tourism. The ministry had already given a “conditional approval” for the proposed change of shareholder structure, added Lippo.
