Macau casino concessionaire SJM Holdings Ltd. has announced that it will acquire the Casino Oceanus at Jai Alai from its parent company, Sociedade de Turismo e Diversões de Macau (STDM).
The deal stipulates that SJM will return the property’s 340,500-square-foot gaming floor to the local government on December 31, when its concession expires. According to Inside Asian Gaming, SJM would not be precluded from reacquiring the gaming area the very next day, January 1, if it wins a new gaming concession in the city.
In addition to its flagship Casino Grand Lisboa, SJM has 16 satellite casinos, and three “self-promoted casinos”: Casino Lisboa, Casino Taipa and Casino Oceanus. Satellite casinos qualify under a concessionaire’s license but are operated by third parties.
SJM will acquire the property by issuing HK$1.906 billion (US$243 million) worth of five-year convertible bonds to STDM with an annual interest rate of 2 percent. The Oceanus non-gaming area is said to be worth HK$516 million with the gaming area valued at HK$1.39 billion. If the convertible bonds are exercised, STDM’s stake in SJM will increase from 54.7 percent to 58.1 percent, Inside Asian Gaming reported.
The acquisition may have been made in anticipation of a previously floated amendment to the Macau gaming law that would have required concessionaires to own all real estate where gaming is conducted. By preemptively complying with this plan, SJM may have believed it would be better positioned for a new gaming concession. This requirement has since been relaxed.
Oceanus’ original acquisition by STDM was in 1999, at a cost of HK$689 million. SJM says that Oceanus is one of the better performing casinos in its group.
