Government seized property in 2012
The former owner of the Savan Vegas casino resort in Laos continues to challenge a sale of the property.
According to the website CalvinAyre.com, Sanum Investments Ltd. and its parent company, Lao Holdings NV, has filed a petition opposing the “motion to dismiss” filed by San Marco Capital Partners LLC, a U.S. firm retained by the Laos government to sell the resort in Savannakhet, Laos. The former owner alleges violations of a 2014 agreement with the government that stipulated the sale should be “for maximum value to the benefit of all parties.”
The resort originated as a joint venture between the Laotian government and a consortium consisting of Netherlands-registered Lao Holdings and Macau-based Sanum Investments. Under the partnership, Lao Holdings owned 80 percent of the complex, with the rest under government control. But in 2012, the government seized the property, claiming it owed $23 million in back taxes. An arbitrator supposedly settled the dispute in June 2014 by requiring the two companies to sell their interest provided Laos drop its tax-dodging and criminal bribery charges.
But the wrangling continues. Lao Holdings and Sanum Investments say San Marco Capital Partners under President Kelly Gass “failed to uphold its fiduciary obligations.” Lao Holdings alleged that San Marco made almost $2 million from Savan Vegas revenues to run and sell the property, but its owner served only the “corrupt and totalitarian” Laos government.
“In contravention of the terms of the investment treaty arbitration, the Laos government unilaterally hired San Marco Capital Partners and Kelly Gass to operate, manage, market and sell Sanum’s valuable Lao gaming assets, which include the Savan Vegas Hotel and Casino and two slot clubs,” said Lao Holdings and Sanum Investments in a news release.
“The defendants, who had no gaming management experience, failed to communicate with the plaintiffs and conduct an open bid process, which would have maximized the sale price of these valuable assets,” the statement continued.
In May of this year, Hong Kong-listed casino services company Macau Legend Development agreed to pay US$42 million for the property, which comes with a 50-year monopoly on casino operations in three Laotian provinces. Sanum Investments says that price is “a fraction of the estimated value,” which it set at up to $250 million.
“The unethical and illegal way that San Marco Capital Partners and Kelly Gass have handled the potential sale of our assets is insulting to any person or company trying to do business in Laos. We hope that the court recognizes this and denies this motion to dismiss,” said Sanum Investments President Jody Jordahl.
Other bidders for the property included Iao Kun Group Holding Co. Ltd., a Nasdaq-listed investor in junket rooms in Macau and Australia; a consortium involving RGB Macau Ltd., which once ran a slot machine operation at L’Arc in Macau; Hong Kong-based Silver Heritage Ltd; Groupe Lucien Barrière, with casinos in France, Switzerland and elsewhere in Europe; and U.S.-based investment firm PGP Investors LLC.
The property on the borders of Thailand and Vietnam includes “a full-service casino, a hotel and numerous entertainment and leisure offerings,” according to a statement from the firm.
In his column in Forbes magazine, Muhammed Cohen wrote, “There’s not much reason to expect a better ending for any foreign owner in a country without a strong regulatory framework, where the government can make up the rules as it goes along.
“Insiders say the Lao government unilaterally short-circuited the bidding process and chose Macau Legend,” which paid “less than a quarter of Savan Vegas’ apparent value.”
“About all that’s clear at this point,” wrote Cohen, “is that there’s plenty to keep lawyers busy.”
