Slots operator Entertainment Gaming Asia (EGA) has further streamlined its operations by selling off its slot machines at gaming venues in Cambodia and the Phillippines.
In March, EGA rejigged its slots supply deal with NagaWorld, the Phnom Penh casino operated by NagaCorp. The previous deal gave EGA a 25% share of the net win of the 670 electronic gaming machines (EGM) it leased to NagaWorld, while the new deal paid EGA a fixed rate per machine that decreased as time went on.
Last week, EGA announced that the leasing deal with NagaWorld had been terminated as of June 30 and it had opted to sell all 670 machines to an undisclosed third-party in Cambodia for $2.5m.
EGA announced a similar sale of 154 EGM it had been leasing to the Leisure World VIP Slot Club in the Philippines. This lease agreement also expired on June 30 and EGA sold the machines to a company “‘principally engaged in the gaming, recreation and leisure businesses” for $750k.
EGA says it continues to lease EGM at two venues in Cambodia – Thansur Bokor Highland Resort and Dreamworld Club (Poipet) – and two venues in the Manila area of the Philippines. The two Philippine leases expired on June 30 but EGA says the machines remain in operation and it’s working to retroactively renew the contracts.
The slots sell-off is but the latest reduction to EGA’s business profile. In May, EGA sold its Dolphin Products casino chip and equipment manufacturing and distributing business to rival Gaming Partners International (GPI) for $5.9m.
That same month, EGA announced a net loss of $1.5m for the first quarter of 2016. Revenue was down 38% to $5.2m, largely due to lower sales in its Dolphin business, which fell to $1.3m from $4.3m in the same quarter last year. Gaming revenue was off a comparatively minor 4% to $3.9m.
EGA CEO Clarence Chung said the exits from the two EGM leasing contracts would have “a negative impact on our near-term cash flow” but hoped the resulting cash proceeds would enable the company to pursue new growth opportunities.
EGA’s Q1 report offered a glimpse of where these new growth opportunities might be found, as the company’s cited nearly $400k in developmental costs for a new social casino platform. In March, Chung had only hinted at a new project that could have “attractive long-term growth potential for the company.”