Hong Kong-listed Paradise Entertainment Ltd announced on Thursday that it has entered into a letter of intent with casino services firm China Star Entertainment Ltd to acquire the latter’s Lan Kwai Fong hotel property (pictured) in Macau for a total purchase price of HKD2.38 billion (US$304.9 million).
Paradise Entertainment is proposing to acquire the entire issued share capital of, respectively, Most Famous Enterprises Ltd, Exceptional Gain Profits Ltd and Charming Era Investment Ltd, as well as the related shareholder loans of the target companies. The sellers are Hong Kong-listed China Star and its subsidiary China Star Entertainment (BVI) Ltd.
The group of target companies owns and operates casino hotel Lan Kwai Fong on the Macau peninsula and some residential units that are currently being used as staff quarters, according to Thursday’s filing. The Lan Kwai Fong property features 209 rooms, a casino, restaurants, shops and a spa centre.
Paradise Entertainment – chaired by gaming entrepreneur Jay Chun – provides casino management services in Macau under service agreements with two existing Macau operators. The company also develops, supplies and sells electronic gaming machines and systems in Macau and internationally under the LT Game brand.
In Thursday’s filing, Paradise Entertainment said it continued to look for “potential opportunities … to expand its business and to increase its market share in the gaming industry” in Macau.
“The proposed acquisition is in line with the group’s business strategies and represents a development of the group’s existing casino management service business,” said the firm.
It added: “Having its own hotel business will enable the group to directly provide hospitality services to its patrons (instead of relying on hospitality services provided by other hotels) to support the group’s existing casino management service business.”
At the end of 2016, Paradise Entertainment managed casino gaming at Casino Macau Jockey Club and Casino Kam Pek Paradise, two properties under the SJM Holdings Ltd gaming licence. It also managed casino operations at Casino Waldo, under the Galaxy Entertainment Group Ltd licence.
It was not clear from Thursday’s filing if Paradise Entertainment would also manage the casino at Lan Kwai Fong hotel.
This is not the first time that China Star has started negotiations to sell the Lan Kwai Fong hotel. In 2014, the firm said it was in negotiations with an independent third party “relating to a possible disposal of Hotel Lan Kwai Fong in Macau”. That sale however fell through and China Star has since been trying to diversify away from the gaming industry.
In a separate filing on Friday, China Star said it plans to use part of the proceeds from the disposal of Lan Kwai Fong to develop a “luxury residential and commercial complex of two towers” in land adjacent to the casino hotel. Construction works already started in June this year, the firm said.
“Such development will require substantial cash resources, and the group is considering to use part of the proceeds of the proposed disposal (if realised) to fund the development of such combined site,” added China Star.
