Macau Legend Sells Savan Legend Casino To Focus On Macau Business

In recent times, the investment holding organization which owns Macau Fisherman’s Wharf zone and at the same time operates the Legend Palace satellite casino, revealed to the public that the management of the company had entered a business alliance. Known as Macau Legend Development Ltd, the company announced that the initial plan and which had been voted unanimously was to sell its Laos-based Savan Legend Casino for 45 million US dollars. The current stand is that they will carry on with the sale of the said business so that they can focus their attention on Macau businesses. 

Based on a letter of intent drawn by the company on June 13, the organization opened up to the fact that they had signed the letter of intent with Shundo Yoshinari, a businessman of Japanese origin. The letter committed the partner to be the buyer of Savan Legend after due diligence had been completed and several other conditions had been met. According to the letter, Yoshinari also has his set of requirements and will go on to buy the entire 100 percent stake in Macau Legend’s subsidiary MLD Resorts Laos Limited. This would mean total profitability from the now new business acquisition.

With these conditions dictating the direction of the sale, there was a filing citing the impending disposal of Savan Legend. It stated that “Two sides could enter into a formal agreement within 14 clear days after completion of due diligence review on the Target Company and Savan Legend by the purchaser.” In addition, Macau Legend had detailed a schedule that stipulated that the formal agreement should have been signed by the 15th day of August. By making a deposit of US$10.0 million, Shundo Yoshinari dealt with the proceedings of the sale to move owing to the fact that the total cost will be settled in phases. 

The person buying the property is obliged to pay an extra US$12.5 million as a deposit once the formal agreement has been signed. The balance of the amount which is US$22.5 million will be handed over once the formal agreement had been made. Under ordinary circumstances, an official agreement should be finalized before the end of September. 

Pointing out these conditions and citing the basis on which the sale was decided upon, the company has justified its position. Even though it appears that 2022 was a profit-making period for the hotel and gaming industries in Lao PDR, according to financials, the region currently records unstable performance. These two businesses are no longer doing well and this has put an enormous strain on Lao PDR gaming market. It will be no surprise if the region experiences a decline in profitability in the coming days. 

Suppose the anticipated sale finally takes place, the selling company will have more resources to dedicate to its other business interests in Macau leading well into the future. The management has explored all options available and is certain that the Letter of Intent, as well as the Potential Disposal, is in the best interests of shareholders. The company, like its counterparts in the business, is eyeing future growth and this can be achieved faster with focused projections. 

A look at the prerequisites

Some of the prerequisites to the sales arrangement that has been planned between Macau Legend and Yoshinari have already been discussed above. There are, however, some that have not been mentioned yet; like the fact that Savan Legend will have to agree to an agreement of flax tax with the government, the terms of which should be agreed upon by both parties. The duration of the initial gaming period is a default of 99 years. If the seller is convinced that the buyer has met all the necessary requirements, the purchase will be formalized and the company will change hands. After the deposit has been settled, the seller expects to receive the remaining sum of US$45 million within a period of 90 days after the non-disclosure agreement has been signed. 

Only a few months ago, Macau Legend signed an agreement of three years with SJM which grants permission to the former to go on offering their services to players of Legend Palace on the Macau. Following this deal, the management of the company revealed that they had lost revenue worth HK$607.2 million within 12 months following the COVID-19 pandemic and similar cross-border restrictions.

Macau Legend in the news

It appears that Macau Legend has been admiring Laos business landscape and the time has come for it to draw near. The management of the brand has confirmed that they have set aside about $500m which will be invested into various projects over several financial years. According to an insider, the long-term goal is to expand its existing properties to capture more market share. This can only be possible with additional land and that is the main reason the company seeks an audience with the government for discussions. 

Speaking on the intended scaling operations, the company’s CEO, David Chow Kam Fai, spoke in April revealing that they were interested in creating a state-of-the-art entertainment resort that will enormously boost the tourism sector in the region. Government permission is the only challenge but they are optimistic because of the social and economic benefits expected. 

A few years ago, Macau was considered as the gambling epicenter of the world; almost all casinos were licensed from there and even had their headquarters at this location. Before the world was ravaged by the pandemic of 2019, this was the best-performing region in the world in terms of revenue, more than sixfold what Las Vegas was managing. 

Final Thoughts

The period of the pandemic will linger on in the minds of many and especially business owners that were affected by strict movement restrictions. Macau could no longer reap from the crippled social scene and it, plus many other entertainment-driven regions took a blow they would take a long time to recover from. 

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