This is a case of one man’s trash being another man’s treasure.
Macau junket investor Iao Kun Group Holding Company (IKGH) is convinced that it made a good decision by buying Jeju Sun Hotel & Casino on South Korea’s Jeju Island from Philippine casino operator Bloomberry Resorts Corporation.
Bloomberry Resorts announced Thursday that it sold Jeju Sun to IKGH for KRW 117.5 billion (US$102.6 million). Analysts said the move to sell Bloomberry’s assets in Jeju Island would help eliminate the financial drag on its operations.
But unlike Bloomberry, IKGH sees the acquisition as an “optimal way to diversify outside of Macau,” noting the potential of VIP operations on the island to grow rapidly. It will also make IKGH the first Macau gaming operator to have a gaming license in Jeju.
“After a comprehensive review of opportunities, the company focused its efforts on the rapidly expanding market of Jeju, Korea,” the Nasdaq-listed gambling firm said in a statement. “Jeju provides excellent accessibility from the Chinese Mainland, with many daily flights from the major Chinese cities.”
IKGH considered several factors in buying Jeju Sun including its close proximity to China, a visa-free policy for Chinese travelers and casino, and island’s low gaming tax rate compared to other jurisdiction. The ownership of the gaming license will be a valuable asset for IKGH as it can be transferred to other potential locations in Jeju.
The company took note of the Jeju hotel’s location, as well the non-expiring gaming license – which allows for the installation of an unlimited number of gaming tables, subject to regulatory approval – before making the acquisition.
“Upon reviewing potential opportunities, IKGH is determined that the acquisition of the Jeju Sun Hotel & Casino and obtaining the non-expiring gaming license was the optimal way to diversify outside of Macau given the quality of the property and its close proximity (five-minute drive) to Jeju International Airport,” the firm stated.
Iao Kun added that it expects to finalize the funding arrangements for the acquisition of the Jeju Sun within the next few weeks.
The company believes that the funding structure that it is currently negotiating “should cause the acquisition to be accretive to earnings per share.”