Casino operator Caesars Entertainment’s dream of entering the Asian market might not come to pass, according to the companay’s South Korean joint venture partner.
In 2013, Caesars and Indonesian property developer Lippo Group formed a joint venture to build a resort casino in Incheon and the government approved the project the following year. But on Monday, Lippo informed the Hong Kong Stock Exchange that there was “no certainty as to whether the project will or will not proceed.”
Lippo says the LOCZ Korea Corp joint venture partners have yet to agree and finalize the $2b project’s investment scope. The partners also haven’t reached consensus on the terms of a deal to acquire the 89k-square-meter plot of land on which the resort is to be built. That’s a problem, because the conditional land deal the parties signed at the end of 2014 expires at the end of 2015.
Lippo says LOCZ Korea Corp is in discussions with MIDAN City Development Co Ltd,, which controls the Incheon property, to resolve the outstanding deal issues and also to discuss a possible extension of the deadline. But MIDAN is majority controlled by Lippo, which suggests that it isn’t Lippo that’s holding up this show.
That is, unless Lippo has become unnerved by Caesars’ bankruptcy woes. While the South Korean project isn’t part of Caesars Entertainment Operating Co (CEOC), the main unit of Caesars that filed for Chapter 11 protection in January, junior creditors opposed to Caesars’ restructuring plans are trying to force the parent company to honor CEOC’s debts. If the creditors win their lawsuits, Caesars says the parent company could also be forced into bankruptcy.
So is Lippo hedging its bets while it waits to see how the US court drama plays out? Lippo could presumably find another casino operator partner to take Caesars’ place, so it simply may not wish to be handcuffed to Caesars if the company starts circling the drain.
Caesars former CEO Gary Loveman infamously decided not to seek a Macau casino license when that market opened up to western companies in 2002. Loveman has called that decision the worst he’s ever made and had hoped to atone for that mistake with his South Korean venture.
South Korea is currently weighing a number of applicants for the last two integrated resort licenses the country plans to issue. The government plans to announce the winners by Feb. 27.