Neptune steady despite HK$1.5b deal on junkets
Shares in Neptune Group, a Macau VIP gambling junket investor, surged as much as 26 per cent in heavy trading yesterday before falling to close unchanged after the company said it would pay HK$1.52 billion - more than twice its market value - for a cut of the profit from two junkets at the Venetian Macao casino resort.
Neptune, which also operates a casino cruise ship anchored in Victoria Harbour, will take 85 per cent of the profit from 16 high-stakes baccarat tables at two VIP gaming halls at Las Vegas Sands Corp's newly opened US$2.4 billion resort, funding the deal primarily with convertible notes and shares.
The company, formerly Massive Resources, is one of four locally listed firms which have raised almost HK$10 billion recently towards investments in Macau VIP junkets which act as the middlemen to bring in high rollers by lending them money and collecting gambling debts in exchange for a commission on gaming chip sales.
Macau's revenue from VIP gaming alone hit US$1.73 billion in the third quarter, for the first time edging past the US$1.69 billion in gaming winnings at all the mega-resorts on the Las Vegas Strip. It is the third such deal this year for Neptune.
In May, the company paid HK$100 million for a 20 per cent interest in the profit of Hoi Seng, a junket operation that controls five baccarat tables, running it as Neptuno VIP Club at Galaxy Entertainment's StarWorld casino hotel.
In February, the company paid HK$140 million for a 20 per cent cut of profit from junket Hou Wan, which controls five high-stakes tables at the Chengdu VIP room at the Sands Macao, sister casino to the Venetian.
The latest two-stage deal is the most ambitious.
The first calls for Neptune to pay HK$1.14 billion to Lei In-peng for 85 per cent of the profit from her registered junket firm, Hao Cai, which controls 12 baccarat tables at the Venetian.
The second HK$381 million deal with Luu Muoi-heng adds four more VIP tables controlled by junket Neptuno Ouro Sociedade.
The junket profit consists of a commission of 0.4 per cent of each junket's gambling chip sales. Neptune did not provide sales figures for the junkets, both of which started business at the Venetian in August.
Neptune will issue convertible notes with a face value of HK$948 million at a strike price of 30 HK cents per share and HK$432 million in new shares at the same price. The remaining HK$109.92 million will be settled in cash.
The deal values both junkets at 5.5 times minimum earnings under a series of profit guarantees.
Shares in Neptune were suspended on November 16 and soared 26 per cent when trading resumed yesterday morning but quickly fell back to end the day unchanged at 34.5 HK cents per share.
The stock has risen 137 per cent this year.
Surpassing total revenue on the Las Vegas Strip in the third quarter, Macau's VIP gaming rooms took in, in US$: $1.7b