Amax shares plunge after loss of two-year junket deal with Melco's Altira casino hotel

Shares in Macau VIP gambling junket investor Amax Holdings slumped as much as 13.7 per cent yesterday after the firm said it was unable to 'assess the potential financial impact' of the scrapping of its contracts to take high rollers to Melco Crown Entertainment's Altira casino hotel.

The Macau government last month implemented a long-delayed cap on the commissions that casinos pay their junket agents, forcing the Altira to cancel a two-year-old junket arrangement with Amax's 80 per cent-owned AMA International, Amax revealed on Sunday in a stock exchange announcement.

Melco Crown sidestepped the AMA deal on December 23 by 'unilaterally' signing contracts directly with its junkets, Amax said.

Previously, AMA acted as a middleman between the casino and the agents, receiving a commission of 1.35 per cent on all VIP chip sales made by junket agents working under its umbrella.

But under the new commission caps, compensation for junket agents is limited to 1.25 per cent of chip sales - inclusive of all 'comp allowances' or rebates for complimentary amenities such as transport, rooms, food and beverage and entertainment for players.

'At present, the board does not have sufficient information to assess the potential financial impact,' Amax said, adding that its profit and asset values could be affected, 'depending on further talks and arrangements with all parties concerned'.