Casino operator Caesars Entertainment’s South Korean joint venture partner is looking for someone to take over its share in the Incheon integrated resort project.
In a filing on Monday with the Hong Kong Stock Exchange, Indonesian property developer Lippo Group said the two partners in the LOCZ Korea Corp joint venture had failed to make their land acquisition deal unconditional before the stipulated Dec. 31 deadline.
Shortly before Christmas, Lippo had warned that there was “no certainty” that the LOCZ Korea project would go ahead, in part because of the parties’ inability to agree to terms on the acquisition of the 89k-square-meter plot of land owned by MIDAN City Development Co Ltd, an indirect subsidiary of Lippo.
In Monday’s filing, Llippo emphasized that the deal wasn’t officially dead just yet. But for the first time, Lippo referenced the “current outlook for the gaming industry in North Asia,” reflecting the fact that the project was approved long before China’s leaders began choking off the flood of high-rolling gamblers to South Korea’s casinos.
Lippo also stated that, should the project go forward, the company has no interest in participating in any of its gaming activities. Lippo could still be interested in non-gaming aspects of the project’s development, assuming the land deal can be worked out to its satisfaction.
In the meantime, Lippo said it is discussing “some alternatives” with Caesars, including the possibility that a third party investor could acquire Lippo’s stake in the LOCZ venture.
It can’t have escaped Lippo’s notice that Caesars is visibly bleeding from all financial orifices. Caesars’ main unit filed for bankruptcy protection in January 2015 and this month brought word that Caesars’ parent company could be on the hook for an extra $5.1b in payments above and beyond what it’s already promised to junior creditors.
The LOCZ partners had pledged to spend nearly $2b on their Incheon resort but Lippo likely fears that any checks Caesars might write at this point would only be redeemable for Monopoly money. The question now becomes: who might be foolhardy enough to take this white elephant off Lippo’s hands?