Gaming and hotel services firm Macau Legend Development Ltd says it has signed a letter of intent to sell its Savan Legend casino resort in Savannakhet, Laos, for a total consideration of US$45.0 million.
The letter was inked on June 13 with an individual named Shundo Yoshinari and identified as the purchaser, according to a Macau Legend filing on Tuesday to the Hong Kong Stock Exchange. The firm only identified Mr Shundo Yoshinari as “a Japanese citizen currently residing in Japan” and an independent third party.
The transaction would involve the sale of MLD Resorts Laos Ltd, an indirect wholly-owned subsidiary of Macau Legend. MLD Resorts Laos directly owns Savan Legend Resorts Sole Co Ltd, a company incorporated in Laos that controls the Savan Legend property.
Explaining its decision to sell the property, Macau Legend said that “although the gaming and hotel business in the Lao People’s Democratic Republic (PDR) was profit-making for the financial year of 2022, its financial performance is unstable and such business is subject to increasingly onerous restraints in Lao PDR, thereby limiting its profitability in the future.”
It added: “If the potential disposal materialises, the group can reallocate more financial resources to its business operation in Macau and for overall future development.”
Macau Legend controls a tourism complex called Macau Fisherman’s Wharf, a waterfront area close to the Outer Harbour Ferry Terminal on Macau peninsula, where the Legend Palace casino is located. Macau Legend provides casino satellite services at the latter property under a renewed agreement with gaming concession holder SJM Holdings Ltd, for a term of three years commencing January 1 this year.
The company said in its filing about the potential sale of Savan Legend that the two sides could enter into a formal agreement “within 14 clear days after completion of due diligence review on the target company and Savan Legend by the purchaser.”
According to the schedule detailed by Macau Legend, a formal agreement could be signed by mid-August. Mr Shundo Yoshinari’s side is required to make an initial deposit of US$10.0 million, to be settled in stages, as the deal proceedings move ahead. The purchaser will be required to pay an additional deposit of US$12.5 million upon signing of the formal agreement.
The remaining balance of US$22.5 million shall be paid at the closing of the formal agreement, stated Macau Legend. According to the schedule mentioned in the filing, the deal should, in normal conditions, be closed by the second half of September.
Macau Legend said that completion of the potential disposal was dependent on a set of conditions. That included Savan Legend entering into a flat tax agreement with the government of Laos with terms agreed by the company and Mr Shundo Yoshinari’s side; and the term of the property’s initial gambling licence being set at 99 years.
Macau Legend reported a full-year 2022 loss of HKD607.2 million (US$77.4 million), on revenue that fell 37.3 percent year-on-year, to HKD711.6 million, it said in a filling in April. The full-year loss was an improvement on the HKD1.19-billion loss recorded in 2021.
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