After a previous attempt at securing land for a casino in Nepal failed last March, Silver Heritage tried again and had better success. After signing a minority equity interest agreement with a Nepalese partner, the company has now received approval to build its second resort in the country on a huge parcel of land in Jhapa.
The new resort, with a reported price tag of $3.2 million, will be built on an 18-acre piece of property valued at around $4.1 million, according to a filing submitted by Silver Heritage to the Australian Securities Exchange. The company stated of the sale of a minority stake, “Given the company’s focus on cash management…[it] has agreed to sell a circa 20 percent interest in the Jhapa land-owning entity to its local partner Mr. Sanchit Shrestha, a transaction which both generates the required capital to compete the purchase while also reducing its outstanding supplier payables.”
Silver Heritage launched gaming operations at its first resort in Nepal in December 2017, the Tiger Palace Resort Bhairahawa, which operates on a capital budget of around $51.5 million. It reported in May that its third quarter revenue would be close to the “monthly break-even” mark. The company also operates two other smaller casinos—the Millionaire’s Club and Casino in Kathmandu, Nepal and the Phoenix International Club, located in Vietnam near Hanoi.
Silver Heritage tried to purchase a large plot of land in Jhapa earlier this year. It ended up losing the purchase, as well as $2.8 million that were given as deposits. The company said that it had “no ability to fund the remaining purchase price.”
A deal with the original land vendor will see the company take possession of the 18 acres after the vendor agreed to allow it to use the deposits that had previously been given for the earlier purchase. The purchase still has to be registered with Nepal’s Department of Industry but, once complete, will reduce Silver Heritage’s outstanding liabilities by about $536,000. That’s welcome news to the company, given that its first-quarter EBITDA (earnings before interest, taxation, depreciation and amortization) was a $1.9-million loss.