GGRAsia – Century Casinos 2018 Vietnam loss capped at US$3.6mln

Century Casinos 2018 Vietnam loss capped at US$3.6mln

Mar 12, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck

Century Casinos Inc says its financial-year 2018 exposure to losses from its venture in Vietnam is limited to no more than US$3.6 million. The United States-based casino, gaming and entertainment company announced in April an interest in a firm with certain rights to a gaming operation on Vietnam’s northern border with mainland China.

Century Casinos is a part-owner of a gaming club – consisting of nine electronic table games – that is 100 metres (circa 300 feet) from a point where mainland China territory abuts Vietnam’s northern Cao Bang province.

In its full-year 2018 financial report filed with Nasdaq on Monday, Century Casinos said the aggregate of its capped Vietnam loss up to year ending December 31 related to a commitment to buy a share in Vietnamese company Minh Chau Ltd by April 2021. A Century Casinos Austrian subsidiary, Century Resorts Management GmbH, controls 51 percent of Golden Hospitality Ltd of Hong Kong.

Golden Hospitality says it will buy 51 percent of Minh Chau by April 2021 – for about US$3.57 million – but owned 9.21 percent of the company as at October last year.

It is Minh Chau that runs the gaming machine club at a 32-room hotel in Ta Lung, on the Sino-Vietnamese border, which is convenient for Chinese visitors, who are prohibited from gambling in mainland China. Vietnamese nationals cannot enter the gaming facility. The facility is about four hours by car from the capital of Guangxi province, Nanning.

Golden Hospitality manages the facility in exchange for a fee from Minh Chau – equivalent to 26 percent of the company’s net profit – and has an option to buy another 19 percent of the Vietnamese company to take its ownership to 70 percent. The facility has a provincial investment certificate that allows for up to 26 electronic table games.

The Century Casinos annual report stated: “The company excluded the presentation of Minh Chau’s financial information upon the company’s determination that Minh Chau’s financial results are not significant compared to the company’s consolidated results.”

In a telephone conference call with investment analysts on Monday, Century Casinos’ vice-chairman and co-chief executive Peter Hoetzinger said: “Vietnam is developing as planned, step-by-step, on a small scale for now.”

Asked about potential expansion, Century Casinos chairman and co-chief executive Erwin Haitzmann stated there would be no growth in relation to Vietnam before the end of this year. “We are investing some small amounts and upgrading the existing facility,” Mr Haitzmann said. “And then we want… at least until the end of summer or toward the end of the year… to watch how… what kind of an impact that has, then make a decision.”

Last year, Brokerage Union Gaming Securities LLC said in a research note that Century Casinos said it would “like to expand to Asia, which is where investor expectations are”.

At the time, analyst John DeCree told GGRAsia via email that: “Century has a history of partnering with local entities (i.e.- in Poland and in Canada) and pursuing growth opportunities via joint ventures, initially to de-risk the project or acquisition.”