Hong Kong-listed Paradise Entertainment, a manufacturer of casino gaming equipment, has inked an agreement to purchase warehouse space in Macau. The deal is reportedly worth $16.37 million and will see the company take possession of 33,000 square feet of industrial space at Centro Polytex in the Areia Preta district. The company has indicated that the space is needed for the storage of inventory.
In a filing with the Hong Kong Stock Exchange, Paradise said that the space was purchased through a subsidiary, Century Force Ltd. It did not name the seller of the warehouse. Paradise will make an initial deposit of $254,805, followed by a second deposit of $1.38 million on June 25. A final payment of just over $14.7 million is due by October 15. The funds for the purchase, which was sealed after markets closed last Friday, come from the company’s own accounts and from bank-issued loans.
Paradise provides electronic gaming equipment and other systems to casinos in Macau and in other countries through its LT Game brand. The company also operates several casinos in satellite properties in Macau using casino licenses held by one of the six local operators. The new storage space will be used in lieu of current warehouse space it rents in Macau for storing gaming machines, spare parts and other equipment.
After a slow first quarter of 2017 which saw the company report a loss in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.28 million, Paradise bounced back in the first quarter of this year. Its EBITDA for the first three months of 2018 climbed to almost $6.6 million. Paradise explained that the figures were supported by an increase in revenue from the sale of gaming equipment and systems.
The company’s casino operations include the Kam Pek Paradise Casino on the Macau peninsula, which is operated under a license held by SJM Holdings, and a casino at the Waldo Casino and Hotel under a Galaxy Entertainment Group license. Kam Pek’s revenue for 2018 Q1 increased by 28.9% year-on-year to a little more than $45 million, while the revenue for its Waldo casino operations fell 3.4% to $14.4 million.