Hong Kong-listed gaming equipment and casino services firm Paradise Entertainment Ltd has entered into a 12-month “supply framework agreement” with a brother-in-law of the firm’s chairman, businessman Jay Chun (pictured in a file photo).
“On December 14, 2018, the company entered into the supply framework agreement with Feng [Linyi] for the sales of the products to the buyers for a term of one year commencing from January 1, 2019 and ending on December 31, 2019,” Paradise Entertainment said in a filing on Friday.
“Pursuant to the supply framework agreement, the company shall supply (by itself or procure other members of the group to supply) the products to the buyers for the buyers’ development, manufacture, sale, marketing and distribution (where applicable) of electronic gaming products in the markets including but not limited to the United States, Canada, and Australia and elsewhere in accordance with the laws and regulations of the relevant jurisdictions on a non-exclusive basis,” the document stated.
It added: “The total transaction amount for the term shall not be more than HK$40 million [US$5.1 million].”
Paradise Entertainment pledged in the agreement to supply its products to Mr Feng’s side “at an 8 percent to 10 percent discount from the group’s respective suggested retail prices of such products… and shall be no more favourable than those pricing discounts offered to other independent third parties by the group for similar model and size of order of the products.”
The firm stated that the products to be supplied under the agreement were “primarily new products”. Mr Chun told GGRAsia the new products referred mainly to slot machines and card shufflers, and were not covered by a 2016 intellectual property agreement between the firm and casino gaming equipment supplier International Game Technology Plc (IGT).
Paradise Entertainment in April 2016 agreed to transfer all of its electronic table game technology, patents and other intellectual property to IGT, with the exception of table game intellectual property used exclusively in Macau. The latest filing by Paradise Entertainment made no reference to that deal.
Prior to the 2016 agreement, Paradise Entertainment announced in August 2014 a three-year distribution deal with IGT. Under the terms of the agreement IGT had agreed to distribute LT Game’s live and electronic table game systems in the U.S. and Canada.
According to Paradise Entertainment’s latest filing, Mr Feng is also a director in some subsidiaries of Paradise Entertainment.
Paradise Entertainment supplies electronic gaming machines under the LT Game brand, and specialises in so-called live multi game products – featuring a live dealer but automated betting and bet settlement. Mr Chun is the firm’s controlling shareholder, chairman and managing director.
Third-quarter group adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 57.3 percent year-on-year at Paradise Entertainment, said the firm in November.
(Updated at 3.00pm, Dec 17)
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