Casino services firm China Star Entertainment Ltd saw its stock rise nearly 27 percent by 1.30pm on Monday trading in Hong Kong. It followed an announcement on Friday by the firm that it had entered into a deal for the disposal of the Lan Kwai Fong hotel property (pictured) on the Macau peninsula for an initial consideration of HKD2.23 billion (US$287.5 million).
There is currently a casino licensed by Macau gaming concessionaire SJM Holdings Ltd inside the hotel building, operated by China Star. Friday’s filing didn’t mention what would happen to that operation.
By 1.30pm the company’s stock was at HKD0.148, a rise of 26.5 percent on the day.
There is also a provision in Friday’s filing for an additional consideration of HKD1.93 billion payable by the purchaser. It applies if the Macau government grants development rights – within 48 months of a letter of intent being signed by the would-be purchaser – on four plots of land next to the Lan Kwai Fong hotel property that China Star says it controls.
A subsidiary of China Star paid HKD550 million (US$70.9 million) for the four plots in 2010. The vendor was Sociedade de Turismo e Diversões de Macau SA (STDM), a company founded by Stanley Ho Hung Sun and holder of the gaming monopoly in Macau up to 2002.
At the time of the land deal, Mr Ho was identified as chairman and director of Lan Kwai Fong (Macau) Ltd, a 50-percent owned subsidiary of China Star.
Under the land lease contract, three of the lots were to be developed with the construction of a building each with 16 floors, for residential use, commerce and parking. The fourth plot, the one closest to Lan Kwai Fong, should also have a 16-storey high building, for offices, commerce and parking, according to a January 2011 filing.
China Star said in its latest filing: “Given that the location of the properties [land plots] is adjacent to Macao Polytechnic Institute and several tourist spots, Forum de Macao, Grand Prix Museum, Wine Museum and Golden Lotus Square, and is a couple of blocks away from Macau Fisherman’s Wharf and Sands Casino, it is believed that the Macau Government requires a longer time to study the impacts of the proposed development of the properties… on traffic, environment and cultural heritage in the surrounding area, before the grant of an approval. Therefore, the properties have remained undeveloped after the acquisition of the property leasehold rights.”
China Star’s Hong Kong-listed stock had been suspended from trading since November 3, pending the announcement of a major transaction.
The entity acquiring the Lan Kwai Fong property was disclosed in the filing only as an offshore company called Bestmix Holdings Ltd, registered in the British Virgin Islands, and described as an “independent third party”.
China Star wants to focus its operations on gaming in Macau, the company said in its results report for the half year to June 30.
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