Aug 27, 2018 Newsdesk Latest News, Rest of Asia, Top of the deck
A land deal for a second purpose-built Nepal resort for boutique casino developer Silver Heritage Group Ltd has been completed at the second attempt, with a local partner taking a minority equity interest in the arrangement, the firm said in a Monday filing to the Australian Securities Exchange.
The US$3.2-million deal is for a plot of 74,500 square metres (802,000 sq feet) in Jhapa, in eastern Nepal.
Silver Heritage’s first purpose-built Nepal resort – Tiger Palace Resort Bhairahawa, which had a revised capital budget of AUD70.3 million (US$51.5 million) – started gaming operations in December.
The firm also runs the Millionaire’s Club and Casino in Kathmandu, Nepal’s capital, and the Phoenix International Club, near Hanoi, in Vietnam.
In the prospectus for its 2016 initial public offering, Silver Heritage mentioned to its potential investors that increasingly affluent Indian consumers were willing to travel cross-border to gamble in neighbouring Nepal.
Regarding the site for a new Nepal scheme, a previous attempt to purchase a larger plot of just over 115,000 sq metres in Jhapa had ended without success in March this year – with the technical forfeiture of circa US$2.8 million in deposits already paid as of that date – because at the time “the company had no ability to fund the remaining purchase price,” the group noted in the Monday filing.
But it added the group had “worked closely” since then with the original vendor and was “delighted to report” it had successfully completed the acquisition of a “reduced parcel of land by utilising in full the initial deposits paid by the company”.
In a May business update the group said it had reached agreement regarding land for a possible additional Nepal resort referred to as “Tiger Palace Resort Jhapa”. Jhapa is a district of eastern Nepal, near the country’s border with the Indian states of Bihar and of Sikkim, and a relatively short distance from India’s contiguous border with Bangladesh. The firm had reiterated in a September 2017 business update its interest in having a new Nepal resort.
In May it said Tiger Palace Resort Bhairahawa was expected during the third quarter to approach “monthly break-even”.
In the latest filing, Silver Heritage stated: “Given the company’s focus on cash management… [it] has agreed to sell a circa 20 percent interest in the Jhapa land-owning entity to its local partner Mr Sanchit Shrestha, a transaction which both generates the required capital to compete the purchase while also reducing its outstanding supplier payables.”
It added such an arrangement was subject to being successfully registered with the country’s Department of Industry, but would reduce the group’s outstanding liabilities by US$536,000.
The filing added that the new parcel of land in question had recently been valued at circa US$4.1 million.
In April Silver Heritage said it had recorded a first-quarter loss in terms of adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) amounting to US$1.9 million.
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