GGRAsia – SJM ups its annual caps for L’Arc, Jai Alai on Macau rebound

SJM ups its annual caps for L’Arc, Jai Alai on Macau rebound

Oct 13, 2023 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator SJM Holdings Ltd says it has increased the annual payment cap related to its leasing of premises of the Jai Alai building from Angela Leong On Kei. Jai Alai is a tourism complex – where SJM Holdings runs a casino – near the Outer Harbour ferry terminal on the city’s peninsula.

In a Thursday filing to the Hong Kong Stock Exchange, SJM Holdings also said it has raised the annual cap related to the provision of services and licensing for operating the casino at L’Arc (pictured), a hotel property in the city’s traditional downtown casino district on the Macau peninsula.

The company said the decision to increase the annual caps related with these two venues was due to the “expected extension of the lease of [the] Jai Alai building”, and the “strong growth in the L’Arc services fees … since the beginning of 2023”.

In March, SJM Holdings said it had an agreement to lease until December 31, 2025 the premises of the Jai Alai building – with the lease to be renewed annually. Under it, Ms Leong – also a director of SJM Holdings – and her associates would be entitled within this year to a maximum of HKD37.4 million (US$4.8 million) in “rental and related payments” from SJM Holdings. The annual cap was set at HKD3.0 million for 2024 and the same level for 2025.

On Thursday, the casino firm said it increased the 2024 annual cap related with the Jai Alai lease to HKD10.2 million. The annual cap for 2025 remains “unchanged and will be reviewed by the management of the group from time to time,” stated SJM Holdings.

In the same filing, SJM Holdings said it was revising upwards the annual cap for 2023 under an agreement with L’Arc Entertainment Group Co Ltd, the entity that controls the L’Arc casino hotel. L’Arc Entertainment is indirectly and wholly owned by Ms Leong.

Under the deal, L’Arc Entertainment provides services to the SJM group, and allows the latter to use the designated area of the L’Arc Hotel for the operation of a casino, including mass gaming area, VIP room and slot machines.

The revised annual cap for 2023 has been raised to HKD510.0 million, from HKD253.1 million, according to the filing.

“The aggregate amount for services fee paid for the eight months ended 31 August 2023 was approximately HKD183.6 million, representing approximately 72.5 percent” of the original annual cap, said SJM Holdings.

“The actual amount for services fees had been increasing in 2023, from approximately HKD12.4 million in January to approximately HKD45.1 million in August 2023,” it added.

“Such increase was mainly attributable to the increase in the gross gaming revenue generated by the Casino L’Arc Macau, primarily due to the recovery of Macau gaming industry in the post-Covid-19 period … and the increase in visitor arrivals” to Macau, stated the casino firm.

The existing annual caps for the L’Arc services agreement for 2024 and 2025 “remain unchanged and will be reviewed by the management of the group from time to time,” it added.

SJM Holdings reported a first-half net loss of nearly HKD2.76 billion, on revenue that declined by 20.9 percent year-on-year, to HKD4.13 billion.