Casino and hotel resort Macau Legend Development Ltd plans to sell its gaming property in Savannakhet, Laos. As reported, the operator has offered its Savan Legend casino resort in Laos for the initial price consideration of US$39 million subject to further adjustments.
US$ 6 Million Gain Expected:
The Macau company recently stated that it expects to gain “approximately HKD47 million” (US$6.0 million) from the sale of the Laos property. As GGRAsia reports, the operator’s statement is based on the fact that the Savan Legend resort reported HKD182 million (US$23.3 million) in consolidated net liabilities as of 31 October 2023. The company also stated that these net liabilities have not been audited and therefore not specifically determined.
Operational Decline:
Further, as GGRAsia reports, the amount of liabilities is almost equal to the loss sustained by the resort in the first half of 2023. The company’s August report compared the H1 2023 loss with the figures from the same period of 2022 to verify almost a three-time loss reduction from the 2022 level of HKD485.5 (US$62.2 million). But Savan Legend also recorded a 22.7 percent year-on-year revenue decline to HKD420.2 million (US$53.8 million) for the first half of 2023 to testify about the overall decline of the property operations.
Limited Profitability:
Macau Legend reportedly commented: “Although the gaming and hotel business in Lao PDR [People’s Democratic Republic] was profit-making for the financial year of 2022, its financial performance is unstable and such business is subject to increasingly onerous restraints in Lao PDR, thereby limiting its profitability in the future.” According to the source, the group’s vertical MLD Resorts Laos Ltd generated a profit of around HKD12.03 million (US$1.54 million) in 2022 following the 2021 loss of HKD64.03 million (US$8.2 million) inflicted by the pandemic-related restrictions.
Japanese Purchaser:
For these reasons, Macau Legend is now to sell its Savan Legend casino resort in Laos to the purchaser reportedly identified as a Japanese citizen Shundo Yoshinari and an independent third party. The announced sale comes after Macau Legend reportedly signed a letter of intent with Mr Yoshinari earlier in 2023 to sell the Savan Legend for the price consideration of US$45.0 million at the time.
Sale to Strengthen the Group’s Cash Flow:
As indicated, this price consideration has meanwhile arrived at US$39 million following the announced adjustment option. According to GGRAsia, Macau Legend acquired the right to operate the Laos property in 2016 for US42 million. After all adjustments, the company reportedly expects to gain US$6 million from the sale. According to GGRAsia, Macau Legend expects to use the gain from the sale to “strengthen the cash flow of the group.” Such a company’s move will reportedly “enhance its liquidity, and… reallocate more financial resources to its business operation in Macau and for overall future development”.