GGRAsia – Macau op SJM in 3yr deals with STDM on services, premises

Macau op SJM in 3yr deals with STDM on services, premises

Mar 03, 2023 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator SJM Holdings Ltd has renewed a products and services master agreement with STDM, extending the historical and business links between two entities founded by the late Stanley Ho Hung Sun. The deals are effective from January 1 this year until end-December 2025.

The information on the deal – which is subject to annual caps on payments from SJM Holdings – is in a Thursday filing to the Hong Kong Stock Exchange, where SJM Holdings is listed.

The products and services deal includes, among others: hotel accommodation for gaming patrons and guests of SJM Holdings; entertainment, including food, drink and entertainment services; transportation, including limousine and shuttle bus services for hotel operations and helicopter services; maintenance; laundry services; hotel management and operation services; and promotional and advertising services.

The aggregate annual cap on products and services payments to STDM for 2023 is HKD136.4 million (US$17.4 million), with incremental increases possible in the following two years.

The annual caps on payments for the respective services and the provision for incremental increases during the life of the deal, reflect factors including “the expected recovery of visitor arrivals and gaming revenue in Macau in the coming few years,” said the filing.

There is additionally a renewal – also until December 31, 2025 – of a STDM premises leasing master agreement covering places including offices and staff quarters used by the SJM side. In 2023, there is an annual cap of HKD18.8 million in relation to the rental agreement, an amount that declines to HKD3.2 million in each of the succeeding two years.

There is additionally refreshment of another three-year deal mentioned in Thursday’s filing – replacing one that expired on December 31, coinciding with the end of SJM Holdings’ previous casino concession – that covers gaming chips.

Since 1 April 2002, the SJM group has been borrowing, for its gaming operations, chips held by the former monopoly STDM, which remains SJM Holdings’ majority shareholder.

Under successive agreements, STDM has pledged to reimburse the SJM side for the aggregate face value of the STDM chips honoured by the SJM side, that were not sold to gaming patrons.

As the SJM side subsequently had its own supply of chips and is no longer borrowing any STDM chips, the overall value of the STDM chips redeemed has “declined substantially from the levels seen in earlier years,” noted Thursday’s filing. The companies agreed on a HKD76.0 million annual cap per year during the term of the new deal.