Sands is bullish, MTGA full speed ahead
Hong Kong-listed developer Lippo Ltd. may withdraw from a planned casino resort project in Incheon, South Korea. Its partner in the development is Caesars Entertainment Corp. The first phase of the project, with an estimated investment of HK$4.92 billion (US$61.3 million), was to have included a foreigners-only casino as well as hotels, apartments, a convention center and a retail district.
The partnership has not been formally severed, but in a filing to the Hong Kong Stock Exchange, Lippo announced it had “no interest in participating in any gaming aspect of the project in any event.” However, according to GGRAsia, Lippo said it may consider participating in “certain developments” associated with the project.
In 2014, the two companies had a conditional deal to acquire land for the casino with vendor Midan City Development Co. Ltd., but they did not make the deal unconditional before the December 31 2015 deadline, according to Casino News Daily.
The business consortium jointly known as LOCZ Korea Corp. got the go-ahead for the project in March of that year from the Ministry of Culture, Sports and Tourism of the Republic of Korea. The group is made up of Lippo Worldwide; a subsidiary of OUE International; and Caesars Korea. Reuters has reported that the equity allocation among the partners would have been 40 percent from Caesars, 40 percent from OUE and 20 percent from Lippo Group.
Lippo also said there was no guarantee the partners would secure a final license for the project, and expressed concern about what it called “the current outlook for the gaming industry in North Asia and the volatility of the global economy.” It is talking with Caesars about “alternatives which may include the possibility for a third party investor to acquire the group’s interest in the project.” The company’s possible exit from South Korea is not news. Last December, Lippo released two filings saying the casino project was filled with “uncertainties,” reported CND.
In the initial stages of the planning, former Caesars Chairman Gary Loveman had said the company hoped to open the resort before the 2018 Winter Olympics, which will be held in South Korea.
Lippo may have reservations about the potential for a resort project in South Korea. But the Las Vegas Sands Corp. is still bullish on the jurisdiction. According to the Korea Times, in a recent interview at Marina Bay Sands in Singapore, George Tanasijevich, managing director of global development for Sheldon Adelson’s company, said the firm will do “whatever it takes” to establish a footprint in the country.
“Our interest level is high because we think the opportunity presented by the market is a very strong one. So we will follow the guidance of the Korean government and Korean people.” So far the government has shunned the Sands’ overtures, which have included proposals for a world-class convention center, because the U.S. operator wants to offer legal gambling for locals.
“I wouldn’t say that our efforts have been thwarted,” Tanasijevich said. “We recognized that this is a process we have to go through to educate people what the opportunity is and what we would like to do.” He says the Sands is willing to invest more than $10 billion in South Korea, almost twice the amount it spent to develop the $5.6 billion Singapore resort.
“Korea is a top development destination for us,” he stressed. “We believe so strongly. We proposed some ideas for consideration so that people would understand what level of interest we have and how committed we are to investing in Korea.”
Meanwhile, the Mohegan Tribal Gaming Authority, operator of U.S.-based tribal casino brand Mohegan Sun, is moving ahead to develop its $5 billion Inspire resort in Incheon, which was recently approved by the Korean government. The MTGA Incheon project will include 1,350 five- and six-star hotel rooms in three towers, a shopping mall, a Paramount Studios theme park, an indoor rainforest and adventure park, and a 20,000-square-meter (215,000-square-foot) casino with 250 tables and 1,500 gaming machines.
The first phase of the resort, with a prime location near Seoul International Airport and a private air terminal, is budgeted for US$1.6 billion.
