GGRAsia – Melco International ends JV for theme park in Zhongshan

Melco International ends JV for theme park in Zhongshan

Sep 27, 2023 Newsdesk Latest News, Rest of Asia, Top of the deck

Hong Kong-listed Melco International Development Ltd says it has an agreement to terminate a joint venture that was to build a non-gaming complex – including a theme park – in Zhongshan (pictured), a city near Macau, in Guangdong province, mainland China. Melco International, controlled by entrepreneur Lawrence Ho Yau Lung, is the parent of casino operator Melco Resorts & Entertainment Ltd, a licensee in Macau.

In its interim report published on Tuesday, Melco International said it had served in July 2022 a notice to its joint venture partner to terminate a cooperation agreement and its supplemental agreements “because certain provisions in the joint venture cooperation agreement were not met by the joint venture partner”.

Subsequently, the two firms signed on June 30 this year a “framework agreement … for the separation plan” regarding the “joint venture termination”.

Melco International said its “management expects that the group will be able to recover the carrying amount of its investment in the joint venture.”

The company announced in June 2021 a plan to develop a “premium residential, entertainment and hospitality mixed-use complex” in Zhongshan. The project – that was expected to be partially completed by 2025 – was to include residential complexes, office areas, hotels, serviced apartments, wellness centres, shopping malls, and a theme park.

The partner was at the time identified as Hong Kong-listed Agile Group Holdings Ltd, an investment holding company mainly involved in property development in mainland China.

The project was to be carried out by an entity called Zhongshan Melco Yachuang Real Estate Development Co Ltd, and the Melco group was to be responsible for developing and managing the theme park within the overall project.

Zhongshan is part of China’s Guangdong-Hong Kong-Macau Greater Bay Area initiative, a national government move to integrate further the economies and peoples of those major population centres.

Zhongshan Melco Yachuang had a registered capital of CNY1.0 billion (US$137.04 million), with Melco International controlling a 51-percent stake, according to the latter’s interim report.

The report showed that as of June 30 this year, Melco International had logged just under HKD180.15 million (US$23.0 million) as “cost of investment” in the joint venture. It recorded a share of losses of HKD2.96 million as of that date, as well as HKD18.13 million as “share of changes in exchange reserve”.

In its latest interim report, Melco International also disclosed that on July 12 it completed the “disposal of a parcel of freehold land together with the accompanying building structures” in Hakone, near Tokyo, Japan, to an independent third party. The deal was worth just above JPY2.14 billion (US$14.39 million), it added.

The Melco group was at some point among several international operators vying for one of Japan’s initial casino resort licences. The group had previously announced plans to invest in non-gaming tourism and hospitality projects in Japan, including a hot spring resort in Hakone, and a ski resort in Nagano.

In September 2019, the Melco group said it would adopt a “Yokohama First” policy in its pursuit of a Japan casino licence, but it eventually discontinued its Yokohama effort, after that metropolis voted into office in August 2021 an anti-casino mayor who decided to scrap the city’s casino policy.