International Entertainment Corp – a Hong Kong-listed company that in January announced it was interested in buying a 70-percent economic interest in Macau junket investor Suncity International Holdings Ltd – said in its interim report for 2014, filed on Friday, that the deal has still not been concluded.
It stated: “The company is still in the process of negotiation with the relevant parties on (among other matters) the detailed terms of the possible acquisition and no definitive agreement… has been entered into by the company or any of its subsidiaries”.
International Entertainment is controlled by the family of Hong Kong billionaire Cheng Yu Tung, who has been a long-term business partner of Stanley Ho Hung Sun, founder of Macau casino concessionaire SJM Holdings Ltd.
On January 9, International Entertainment said it had entered into a term sheet with Suncity International – the potential vendor – and Alvin Chau Cheok Wa, the sole beneficial owner of the vendor – about acquiring a 70-percent economic interest in the business. It was to be effected via purchase of a 70-percent equity interest in Suncity International, which in turn International Entertainment said was entitled to all the net profit from gaming promotion operations by Sun City Gaming Promotions Co Ltd.
Since the announcement, Macau VIP gaming revenues have declined significantly, with a 19-percent fall year-on-year in the third quarter of 2014. That has been linked by investment analysts and some operators to many players wishing to keep a low profile as Beijing continues its crackdown on corruption in the Chinese mainland.
Recently some Macau junket operators have been exploring opportunities to take their Chinese customers to other casino jurisdictions. On November 18, a note from Union Gaming Research Macau Ltd said Suncity group could begin sending VIP players to NagaCorp Ltd’s flagship casino property in Cambodia by December.
International Entertainment currently makes its money from hotel operations and the leasing of investment properties “equipped with entertainment equipment”, according to its latest filing for the 6 months ending September 30.
An indirect subsidiary of the company has a 12-year contract – that started in March 31, 2004 – with the Philippine gaming regulator the Philippine Amusement and Gaming Corp to lease gaming and office premises in that country.
International Entertainment said that group-wide profit for the first six months of 2014 fell 39.4 percent to approximately HKD39.77 million (US$5.1 million), compared to HKD65.68 million a year earlier.
The firm said the decrease was “mainly due to the net effect of the decrease in net exchange gain recognised for the period; and the recognition of a gain on change in fair value of financial assets at fair value through profit or loss for the six months ended 30 September 2014.”
Last week it emerged that Mr Cheng’s Hong Kong conglomerate Chow Tai Fook Enterprises Ltd had signed a letter of intent to invest US$1.6 billion to create a new South Korean casino resort at Incheon, near the country’s capital Seoul.
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"Competition is tough in Macau and is also changing. It [the local market] is susceptible to a lot of macro factors”
Daisy Ho Chiu Fung
Chairman of casino operator SJM Holdings Ltd