Brokerage JP Morgan Securities (Asia Pacific) Ltd has labelled as “market noise” a letter from Asian American Entertainment Corp (AAEC) to the Macau commission overseeing the city’s tender for fresh casino licences.
In the letter, Asian American argues that incumbent operator the Sands China Ltd group – a bidder, via a subsidiary, for one of the new licences – is “under a situation of high financial risk” due to multimillion U.S. dollar legal action against it, linked to the city’s 2001 tender process.
The equivalent of US$11.92 billion in damages is being sought by Asian American, claiming the firm had been instrumental in the Sands side getting its initial 20-year Macau gaming licence at the turn of this century.
In a memo issued on Thursday, JP Morgan noted that, “although we cannot elaborate on the merits of [the] claim itself”, Macau’s Court of First Instance in April ruled against Asian American, although the latter firm has already filed an appeal.
“We cannot speculate on the outcome of the lawsuit/appeal, but we reiterate that this [news] has nothing to do with what the government thinks/says,” wrote analyst DS Kim. “This letter was sent by Asian American, who, as per the Macau court, had acted in bad faith and distorted the facts.”
He added: “As such, we are not worried about this headline,” adding that Sands China’s stock was the institution’s ‘top pick in Macau”.
Asian American suggested in its letter to the tender commission that Sands China – via its subsidiary Venetian Macau SA –should provide a bank guarantee in the amount of US$11.92 billion to the commission. That would be in order to show the firm enjoys “adequate financial capacity” to be a Macau casino concessionaire, as required by the tender documents. If the firm was unable to provide such a bank guarantee to the tender commission, it should be disqualified from the tender process, argued Asian American.
In other developments linked to the Macau gaming concessions public tender, Credit Suisse (Hong Kong) Ltd said on Monday that according to a “channel check”, the process “is not as straightforward as expected,” with the “government demanding much more non-gaming investment” from the bidders.
The Macau authorities have stated they aim to have up to six, 10-year new concessions, starting from January 1, 2023. The winners will be selected from the seven accepted applicants to the public tender for fresh gaming rights: the six incumbents and one newcomer, GMM Ltd, a unit of Genting Malaysia Bhd.
