Dore invests HK$2b in VIP gaming firms

Macau casino junket investor Dore Holdings has agreed to pay HK$2.01 billion for two holding companies that receive commission on VIP gambling chip sales to high rollers at the Wynn Macau.

The deal comes amid a slumping market for Macau plays but the investment would be the company's biggest bet to date on the VIP gaming segment, which accounted for 68.3 per cent of the city's 94.44 billion patacas in casino revenues in the year to March.

Dore, formerly known as Teem Foundation, has already spent HK$3.1 billion over the past two years buying rights to the profit from three separate junket operations at the Sands, Wynn and Venetian casino resorts.

The company said yesterday that it had signed a 'heads of agreement' to acquire rights to the 90 per cent of profit it did not already control from the Wynn VIP baccarat tables reserved by junket operator Joli Entretenimento Sociedade Unipessoal Limitada.

Dore last month paid HK$224.32 million for rights to an intial 10 per cent of the profit generated by Joli, which is owned by Sin Chun-shing.

Junkets are the middlemen who bring high rollers to casinos, lend them gambling money and collect their debts.

In return they generally receive 40 to 50 per cent of a casino's winnings, in some cases paid as a commission on their gross sales of VIP gambling chips at rates of up to 1.5 per cent. Dore said profit from the Joli junket was equal to 0.4 per cent of chip sales, which would be net of operating costs and rebates to players.

The company yesterday said it planned to acquire East & West International and Pacific Force, two shell firms owned by Mr Sin and an unnamed third party that receive 0.36 per cent of Joli's chip sales at the Wynn, or 90 per cent of its profit.

The company did not say how it will settle the HK$2.01 billion payment. It has financed previous junket investments through a combination of cash, new shares, convertible bonds and promissory notes.

Shares in Dore have plummeted more than 70 per cent in the year to date amid a sell-down of Macau plays that has been fuelled by concerns over declining profitability, overcapacity and regulatory uncertainty in the gambling enclave.

The stock gained 2.27 per cent to close at 45 HK cents yesterday.