The Hong Kong Stock Exchange has written to Macau VIP room investor Iao Kun Group Holding Co Ltd to state it cannot at this stage approve the firm’s request to list in Hong Kong, says the firm.
Iao Kun said in a statement on Wednesday: “Based on the information we provided to the stock exchange and the media reports, the letter indicates that, due to the declining financial performance of the company, the unpredictability of the company’s revenues, the overall market conditions and the near term industrial outlook in Macau, and certain related party payments…(as already disclosed in the company’s public filings), the stock exchange is unable to proceed further with the company’s listing application at this time.”
On December 1, the casino junket investor reported a net loss of US$12 million for the third quarter ending September 30. But it added in Wednesday’s announcement: “Notwithstanding the decision of the stock exchange, the company is financially sound, with a track record of profitability.”
“The management is of the view that the declining financial performance is a temporary setback primarily resulting from slow economic growth in mainland China, the tightening of our credit extension policy, and the anti-graft campaign launched by the Chinese government in 2014,” Iao Kun said.
VIP gross gaming revenue (GGR) market wide in Macau fell by 10.9 percent for the full-year of 2014, but Iao Kun said its GGR last year “only had a slight decrease … of approximately 3 percent”. The firm added that it is “still committed to the Macau VIP gaming segment” and plans to further expand by looking for new VIP room opportunities in new locations.
Asia Entertainment and Resources Ltd – as Iao Kun was previously known – had an initial public offering on Nasdaq in New York in August 2008. It is still listed there. The shares closed flat at US$1.11 in Wednesday trading on Nasdaq.
Iao Kun had expressed an interest in a dual listing in Hong Kong since 2013. It made a formal application in June 2014. The Hong Kong exercise it sought is known as a ‘listing by introduction’. In such a process, a company that has shares issued on another exchange can – subject to local regulatory approval – list its shares in Hong Kong without raising new funds or issuing new shares.
This is the same method used by Nasdaq-listed Macau casino developer Melco Crown Entertainment Ltd when it made a dual listing in Hong Kong in December 2011. Melco Crown announced on January 2 that it was seeking to delist in Hong Kong, citing a wish to reduce regulatory compliance obligations and costs.
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Amount that each Macau casino operator paid for the circa six-month extension of their respective contract