Ho companies buy into Russian casino resort
Melco Development and Summit Ascent pay HK$514 million for 51 per cent holding
Companies controlled by Lawrence Ho Yau-lung, a son of Macau gaming mogul Stanley Ho Hung-sun, will invest HK$514.1 million in a 51 per cent stake in a casino resort in Russia which will have a total investment budget of HK$1 billion.
Last Friday, two Hong Kong-listed firms controlled by Lawrence Ho - Melco International Development and Summit Ascent - entered into an agreement to invest in 51 per cent of Hong Kong company Oriental Regent, which owns a casino resort in Primorye, Russia.
The casino was under construction and had a planned total investment of US$130 million, the two firms said yesterday.
Summit Ascent will invest two billion roubles (HK$463.7 million) for a 46 per cent stake in Oriental Regent, while Melco will pay 216.7 million roubles for a 5 per cent interest.
The casino resort sits on a 90,455 square metre plot and will have a planned gross floor area of 31,630 sq metres. It will have 119 hotel rooms, 800 slot machines, 25 VIP gaming tables and 40 mass market gaming tables, and is expected to open in September next year.
"The casino resort has the advantage of being geographically close to the target feeder markets, the three Chinese provinces in northeastern China, namely Heilongjiang, Jilin and Liaoning," said Summit Ascent, which invests in property and supplies building equipment.
"Russia offers a favourable tax environment for gaming business compared to other jurisdictions. The investment will give the company a first mover advantage as the proposed casino resort will most likely be the first legal casino to start operating in the Far Eastern Region of Russia."
The casino will pay Summit Ascent a fee of 3 per cent of its gross gaming revenue and pay Melco a consultancy fee of 0.3 per cent of its gross gaming revenue.
Under this agreement, Oleg Drozdov, a Russian businessman engaged in the construction business in Primorye, will own 30 per cent of the casino resort, and Firich Enterprises, a company listed in Taiwan, will own a further 19 per cent.
On August 5, Drozdov acquired 49.99 per cent of the casino project from another Russian businessman, Aleksey Simanchuk. But on August 23, Summit Ascent's adviser received a letter from someone claiming to be the wife of Simanchuk, referring to divorce proceedings between her and Simanchuk. Her letter said the sale of her husband's stake in the casino to Drozdov was made without her consent and therefore illegal.
Summit Ascent said: "There is no valid legal basis for any claim of those matters which could adversely affect the transaction."