A consortium backed by Macau casino magnate Lawrence Ho plans to raise its stake in a resort casino near Vladivostok.
Citing a knowledgeable source, The Wall Street Journal reports that Ho’s investment group will buy half the stake of its imprisoned Russian partner for US$20 million, raising its collective share in the project to 85 percent, with the partner, Oleg Drozdov, retaining 15 percent.
Drozdov has been in detention since late last year in connection with alleged “business malpractices” tied to the construction of a sewerage plant, according to a filing by one of Ho’s companies with the Hong Kong Stock Exchange.
The filing said the investigation wasn’t linked to the casino plan, but it could trigger a buyout in the event that any stakeholder is “deemed by any relevant gaming regulatory authority to be an unsuitable associate”.
The transaction, once completed, will see Hong Kong-listed Summit Ascent Holdings, in which Ho holds 33.8 percent, raising its stake from 46 percent to 60 percent. Partner Firich Enterprises, a Taiwan-listed manufacturer of gambling machines, will own 20 percent. Ho’s Hong Kong-listed Melco International Development will own 5 percent.
The first phase of the casino, located in Primorye, a Russian Far East territory bordering China, is scheduled to open by the end of this year, the first new gambling resort to open in Russia since a Kremlin crackdown in 2009 banished the industry from major cities and set up four permissible zones in outlying parts of the country, one of them Primorye.
Vladivostok is closer to Beijing than Macau, about two and a half hours’ flight time compared with three hours and 45 minutes to Macau, according to the Journal’s calculations, and Ho’s group believes the US$650 million casino will attract a sizable number of high rollers from northern China.
Initial plans call for 65 table games, 800 slot machines and 120 hotel rooms.
US-based Global Market Advisors, whose subsidiary Gaming Market Advisors prepared a casino industry report for the Primorye government in 2012, believe the region could generate US$1 billion in gambling revenue in the early going.
Cambodia’s Hong Kong-listed NagaCorp., which holds a lucrative casino monopoly in Phnom Penh, also plans to build in Primorye in partnership with local interests. Global Gaming Asset Management, a US-based investment and operations group founded by former senior executives of Las Vegas Sands, also has expressed interest in the market.