The deadline for Macau casino services firm Macau Legend Development Ltd’s US$42-million deal for the right to operate the casino hotel in Laos known as the Savan Vegas Hotel and Entertainment Complex (pictured) has been extended from July 29 to August 31.
The closing date for what is known as the Initial Project Development Agreement – first announced in May – will be automatically further extended to September 10 if necessary, said the suitor firm in a filing to the Hong Kong Stock Exchange on Friday. Macau Legend is co-chaired by former Macau legislator David Chow Kam Fai.
A concession licence for the Laos investment for an initial term of 50 years will be issued separately under what is referred to as the Revised Project Development Agreement, Macau Legend added in a separate filing on Monday. It will allow a Laos-registered project company of the suitor to “engage in concession activities, lease the project area, and engage in the operation and management of the project”.
“As a result of the proposed replacement of the company by the project company as a party in the Revised Project Development Agreement, the company is expected to enter into a performance guarantee to guarantee the payment obligations of the project company with an aggregate liability of not more than US$30 million,” stated Monday’s filing.
Savan Vegas was previously controlled by Sanum Investments Ltd and its parent Lao Holdings NV, before the Laos government in 2012 seized the resort operation – claiming that Sanum owed US$23 million in back taxes and penalties – and appointed an interim management.
Sanum Investments and Lao Holdings are fighting – via lawsuits in the U.S. – the seizure of the property.
The deal for Macau Legend group to take over operation of the property includes taking on the “assumed tax liability” of the project, which the filing said “shall not exceed US$42 million”.
The market value of the Savan Vegas Hotel and Entertainment Complex “in its existing state” as at May 31 was US$42.4 million, according to Monday’s filing.
Macau Legend said in the filing that Savan Vegas’ net loss for the year to December 31, 2015, widened to HKD92.45 million (US$11.9 million) from HKD3.45 million in the prior-year period. Macau Legend said the reasons for the “significant deterioration” of the financial performance of the target were: a 5 percent depreciation in the Thai baht – the currency used by many of the resort’s customers – against the U.S. dollar; a decrease in the number of visitors; the default of two junket operators in their credit with the casino, and a consequent loss of their VIP play volume; and a downturn in general gaming revenue.
As at the latest practicable date, the hotel at Savan Vegas had 472 guest rooms, including 23 suites. The casino at the project had 92 tables and 493 slot machines.
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Analyst at Roth Capital Partners