GGRAsia – China Star raising cash to expand Macau gaming business

China Star raising cash to expand Macau gaming business

Jul 09, 2014 Newsdesk Latest News, Macau, Top of the deck

China Star Entertainment Ltd, which controls Casino Lan Kwai Fong (pictured) on the Macau peninsula, is raising about HKD538.5 million (US$69.5 million) to expand its hotel and gaming operations, it said in a filing to the Hong Kong Stock Exchange. Planned investments include a shopping and entertainment complex with apartments.

The company also announced it had appointed Mung Kin Keung as co-chairman, effective July 8, 2014. Mr Mung is chairman of Hong Kong Airlines Ltd and is described as having extensive business experience and network in mainland China.

China Star will issue 1.5 billion subscription shares at HKD0.09 a share, a discount of 28 percent to the closing price in Hong Kong trading on July 8. The shares represent about 9.41 percent of the enlarged capital.

“All the net proceeds … of the share subscription of approximately HKD134.30 million will be used for investment in gaming/gaming-related business in Macau,” China Star said in Tuesday’s filing.

The subscriber is a company called Long Joy Investments Ltd, a subsidiary of Well Way Group Ltd. Mr Mung is an executive director of Well Way and holds approximately 22.82 percent of the issued share capital of Well Way, according to the statement.

Mr Mung also agreed to subscribe to HKD405 million in convertible bonds to be issued in a maximum of five tranches and convertible at a price of HKD0.09 per share.

The deals are subject to shareholders’ approval at a special general meeting, which is yet to be scheduled.

China Star is in the process of buying an equity interest in a junket operator called Eight Elements Entertainment Ltd. The company has agreed to pay HKD800 million for the rights to the profit from the Eight Elements junket operation.

The casino operator said it plans to focus its growth strategy in the hotel and gaming operations. Profit from hotel and gaming operations at Hotel Lan Kwai Fong was approximately HKD215.79 million in 2013, up by 11.91 percent year-on-year. The casino operates under a licence from SJM Holdings Ltd.

China Star said it plans to develop the sites it owns adjacent to the property. “By developing the sites into a shopping and entertainment complex with apartments, the directors believe that the complex will attract more traffic to both Hotel Lan Kwai Fong Macau and Casino Lan Kwai Fong,” it said.