Iao Kun better connected with VIPs
Macau and Australasia junket operator Iao Kun Group Holding Co. will buy Bloomberry Resorts Corp.’s Jeju Sun Hotel & Casino on Jeju Island. It will acquire Bloomberry’s 96.23 percent share through its subsidiary, Iao Kun Jeju Hotel Co. Ltd., reported the Asia Gaming Brief.
The pending sale—worth about US$102 million or 117.5 billion Korean won—was revealed in a filing by Bloomberry to the Philippine Stock Exchange. “Iao Kun desires to enter into the Jeju market and is confident that it can attract its Chinese VIP customers to Jeju Island,” the filing stated.
Last year, Bloomberry bought Jeju Sun for about US$54 million. It invested another $15 million in upgrades, but could not stop a 30-day shutdown of the property due to “tax irregularities of the previous owner,” reported AGB.
The deal never paid off for Bloomberry, and the subsidiary lost money on the property during the first quarter of 2016.
In a statement, Iao Kun Chairman Lam Man Pou said, “We are excited to be acquiring the Jeju Sun Hotel and Casino in Korea, our first lodging venture, which effectively broadens our strategic focus toward becoming a full-service hospitality company.
“We believe the acquisition will materially expand our footprint in Asia into the growing Korean market and increasingly popular island of Jeju while allowing us to further diversify and stabilize our revenue streams and cash flows. We expect the current Jeju Sun Hotel management team will remain to continue to run the newly renovated property, and we look forward to welcoming them to IKGH,” the chairman added.
Jeju Sun posted gross gaming revenue of PHP23.3 million (US$502,000) in the first quarter of 2016, according to figures from Bloomberry. It recorded negative earnings before interest, taxation, depreciation and amortization of PHP197.7 million for the period, reported GGRAsia.
Union Gaming said the sale is the most “recent example of Macau-centric junkets attempting to transition from being agents to principals – and therefore direct competitors to existing casino operators who are also the patrons of junkets.”
Iao Kun has five VIP rooms in Macau casinos. In May 2015, the firm expanded to Crown Perth and Crown Melbourne in Australia.
Union Gaming’s analyst Grant Govertsen said other junkets are “exploring similar acquisition opportunities and/or are looking to create their own greenfield opportunities overseas.
“We would not only expect Macau’s VIP segment to experience top-line headwinds going forward, but the principal dynamic should also result in bottom-line headwinds for the VIP segments of existing casino operators,” he added.
Bloomberry, meanwhile, said its Solaire Korea subsidiary “intends to focus its effort on the development of its property in Muui and Silmi Islands” in South Korea.
