Hong Kong-listed casino equipment maker Paradise Entertainment Ltd issued after trading hours on Friday a warning that it might record a “substantial loss” for the year ending December 31, 2016, compared to a loss of approximately HKD149 million (US$19.2 million) in the corresponding period in 2015.
Paradise Entertainment develops, supplies and sells electronic gaming systems in Macau and internationally under the LT Game brand. The company also provides casino management services in Macau under service agreements with two existing Macau operators.
The firm said the expected loss in the year of 2016 is mainly attributable to “the preliminary estimated loss” worth approximately HKD335 million related to the grant of some exclusive rights to global gaming supplier International Game Technology Plc (IGT).
Paradise Entertainment in April agreed to transfer all of its electronic table game (ETG) technology, patents and other intellectual property to IGT, with the exception of table game intellectual property used exclusively in Macau.
Under the agreement, IGT would pay Paradise Entertainment an upfront fee of US$12.95 million; IGT will also make earn-out payments – on a quarterly basis over a 15-year term – based on placement in casinos of products utilising Paradise Entertainment’s table game intellectual property.
The preliminary loss flagged by Paradise Entertainment in its Friday filing did not take into account the earn-out payments that IGT has to make during the term of the agreement.
Paradise Entertainment posted a net loss of HKD416.8 million for the first half of 2016, according to its interim report.
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