Shareholders of casino services firm Macau Legend Development Ltd have approved a variable-interest-entity (VIE) agreement between wholly-owned subsidiary Hong Hock Development Co Ltd and a VIP gaming promoter. The vote was confirmed at an extraordinary general meeting on Thursday, Macau Legend said in a regulatory filing.
The company had said in previous filings that the deal with New Legend VIP Club Ltd would enable Macau Legend to “diversify its business and indirectly participate in the gaming promotion business”.
Macau Legend, controlled by businessman David Chow Kam Fai, is building three new hotels and more entertainment venues at its Macau Fisherman’s Wharf (pictured in a rendering) site a waterside location on Macau peninsula . The revamp, which includes two new casinos, will cost about HK$6 billion (US$774 million), the firm has said.
The company already operates the Babylon Casino and the Pharaoh’s Palace Casino at Landmark Macau hotel under a SJM Holdings Ltd licence.
Macau Legend had said the VIE agreement with New Legend would alter the relevant VIP business model from a rolling chip commission model to a revenue share one calculated at 42 percent.
Macau Legend is not allowed under Macau laws to participate directly in gaming promotion activities through a subsidiary. A VIE structure would allow Macau Legend to indirectly participate in the gaming promotion business.
Currently, New Legend only promotes a VIP room, New Legend VIP Club, in Pharaoh’s Palace Casino. The VIP club has six gaming tables, the company said.
More companies with interests in so-called ‘satellite casinos’ in Macau are planning to take equity interests in profits of VIP gaming operators. China Star Entertainment Ltd, which controls Casino Lan Kwai Fong in downtown Macau, is in talks to buy an equity interest in the profit stream from a junket operator called Eight Elements Entertainment Ltd.
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Amount that each Macau casino operator paid for the circa six-month extension of their respective contract