The gaming and hotel service firm Macau Legend Development Ltd, owner of the Macau Fisherman’s Wharf precinct and operator of satellite casino Legend Palace, has signed a letter of intent to sell its Savan Legend casino and resort in Savannakhet, Laos for USD 45 million.
The letter was co-signed on 13 June by a businessman called Shundo Yoshinari, who was only identified as “a Japanese citizen currently residing in Japan” and an independent third party by Macau Legend.
If the deal goes through after the completion of due diligence and satisfaction of several condition precedents, Mr. Yoshinari will acquire the entire equity interest of Macau Legend subsidiary MLD Resort Laos Limited, which wholly owns Savan Legend.
“Although the gaming and hotel business in Laos was profit-making for the financial year of 2022, its financial performance is unstable and such business is subject to increasingly onerous restraints in Laos, thereby limiting its profitability in the future,” says Macau Legend when explaining the decision to sell.
The company said in its filing to the Hong Kong Stock Exchange about the potential sale, that the two parties could enter a formal agreement “within 14 clear days after completion of due diligence review on the target company and Savan Legend by the purchaser.”
Yoshinari’s side will be required to make an initial deposit of USD 10 million in stages as proceedings move ahead, and the buying party will be required to deposit an additional USD 12.5 million upon signing the formal agreement. The remaining USD 22.5 shall be paid at the closing of the formal agreement, which should be done by mid-September.
According to Macau Legend, formal agreements are likely to be signed between the two parties in mid-August.
Among the condition precedents listed by Macau Legend are that Savan Legend enters into a flat tax agreement with the government of Laos on terms agreed by all parties, that the term of the initial gaming license shall be 99 years, and that there are no adverse terms to Mr. Yoshinari contained with the land tenancy certificate.
“If the Potential Disposal materializes, the Group can reallocate more financial resources to its business operation in Macau and for overall future development. The Board considers that the entering into of the Letter of Intent and the Potential Disposal is in the interests of the Company and the Shareholders as a whole,” said Macau Legend.
Macau Legend reported losses of USD 77.4 million in 2022, on revenue that fell 37.3% year-on-year to USD 90.8 million, according to its April filing. The full-year loss was an improvement on the USD 151.9 million loss in 2021, due to the Covid-19 pandemic and related border restrictions.
