Hong Kong-listed real estate developer Lippo Ltd says it and an associated business, Lippo Worldwide Investments Ltd, have completed their exit from a South Korea casino project at Incheon that is led by U.S. casino group Caesars Entertainment Corp.
Lippo said it and Lippo Worldwide would receive considerations and payments of up to approximately US$23.5 million in aggregate.
Lippo stated in a Friday filing the group had disposed of its entire share interest in a joint venture holding company for the scheme and terminated its involvement in a transaction regarding proposed acquisition of land for the project.
In return for giving up its interest in the issued shares of LOCZ Holdings Pte Ltd to a new joint venture – formed by the Caesars group and a unit of mainland China real estate developer Guangzhou R&F Properties Co Ltd – the Lippo group is to receive a consideration of approximately US$12.2 million.
Additionally a deposit of US$6.6 million was refunded to Lippo Worldwide – a British Virgin Islands registered company – regarding the land deal. The Lippo group received a further sum of approximately US$2.7 million related to money that had been advanced to LOCZ Korea Corp, a unit of the original joint venture.
Another strand of the disposal exercise is that a unit of Guangzhou R&F Properties has agreed to pay US$2 million in the event that a land deal is closed for phase two of the proposed casino project.
As a result of the disposal exercise, OUE International Holdings Pte Ltd, a unit of Singapore real estate business OUE Ltd, a firm also controlled by Lippo, is also exiting the project.
Lippo had said in a December 29 filing that “conditional approval” for its exit had been received from South Korea’s Ministry of Culture, Sports and Tourism.
The firm had stated in the same filing it was seeking to dispose of its interest in the project “in light of the current outlook for the gaming industry in North Asia and the volatility of the global economy”.
An investment analyst covering the casino industry said in a March 6 note that reported geopolitical tensions between China and South Korea over the deployment of a U.S. missile system in the latter country could divert Chinese tourists from South Korea and toward Macau.
Steven Tight, president of international development for Caesars Entertainment, told GGRAsia in a January interview the South Korea scheme – described as a US$700-million venture – was “currently targeting completion at the end of 2019 or early 2020” and would be “right-sized,” “supportable” and “without reliance on the Chinese VIP [gambler] market”.
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”Continued negative coverage of the Abe administration, coupled with political losses for the Liberal Democratic Party ... may reduce support for the gaming agenda, which already has only limited public support”
Analyst at brokerage Sanford C. Bernstein