Macau casino services firm Macau Legend Development Ltd says it has agreed to pay US$42 million for the right to operate the casino hotel in Laos known as the Savan Vegas Hotel and Entertainment Complex. The deal also includes the right to a 50-year monopoly on casino operations in three Lao provinces including the one where the resort is located.
The agreement with the Lao government also envisages the possibility of Macau Legend developing a plot of land next to Savan Vegas and building two golf courses, a 600-room hotel, villas, casino, exhibition hall and spa, pool facilities, staff quarters and training facilities, Macau Legend said on Friday.
An earlier plan by the Lao government to dispose of the hotel had involved a tender process, after which a shortlist of six companies had been drawn up.
But a filing on May 11 by the parent of one of the shortlisted applicants – RGB International Bhd, a maker of electronic gaming machines for casinos – said the tender process had been terminated by the government of the Lao People’s Democratic Republic. It didn’t give a reason.
Macau Legend said in a press release issued on Friday: “The project development agreement (PDA) has an initial term of 50 years, and subject to fulfilment of all obligations by Macau Legend for the initial term, may be extended for an additional period up to another 49 years.”
The firm added: “During the term of the PDA, the government of the Lao PDR shall not grant to any third party any licence, permit or concession authorizing such third party to operate any gaming activities within the exclusivity zone (which consists of the provinces of Bolikhamsay, Khammouane and Savannakhet of the Lao PDR) without the prior written consent of Macau Legend.”
The terms of the deal were also confirmed in a filing by Macau Legend to the Hong Kong Stock Exchange.
David Chow Kam Fai, co-chairman and chief executive of Macau Legend, added in the press statement that his firm would assist the Lao government in its aim of turning the Savan Vegas project into a “regional entertainment hub in Southeast Asia”.
He added: “Over the short term, in Macau, the market has been challenging which means it is an opportune moment to invest for the growth. Our first overseas project at Cape Verde is progressing smoothly on budget and on schedule, which allows us to take additional investments in areas with high growth potentials. Laos provide such an opportunity. We have strong support from the Government of the Lao PDR and since the facilities are already in place this should shorten the development time in helping develop the market for tourism in this region.”
Savannakhet province, where Savan Vegas is located, is close to Thailand and China – two countries that ban casino gaming – and to Vietnam, a country that forbids its own citizens from using those casinos located within its borders.
Macau Legend said that Savan Vegas is on a 50-hectare (124-acre) plot and its casino currently has 92 tables and 493 slot machines. The resort also has a 476-room hotel and a convention centre, restaurants, bars and shops.
Last week, Lao Holdings NV, the parent company of a firm called Sanum Investments Ltd, said it had filed three legal actions alleging violations of a 2014 agreement with the government of Laos.
The Lao government in 2012 seized the resort operation – claiming that Sanum Investments owed US$23 million in back taxes and penalties – and appointed an interim management with a view to disposal of the property to other investors.
Macau Legend’s Friday filing said the US$42-million deal included “payment of the assumed tax liability”. The transaction is expected to close no later than July 29, 2016, said the firm.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia