Emperor International Holdings Limited, through subsidiary Emperor Entertainment Hotel Limited, announced it was increasing its stake in the operator of Macau’s Grand Emperor Hotel.
According to a filing with the Hong Kong Stock Exchange, Emperor Entertainment will be purchasing the 15% stake in Luck United, indirectly non-wholly owned by Emperor Entertainment, for a total of HKD460 million ($58.7 million), from Big Wheel Limited.
HKD138 million ($17.6 million) has been paid to Big Wheel, with the remaining HKD322 million ($41.1 million) to be paid upon completion of the sale.
“Upon Completion, the Purchaser will hold 75% equity interest of Luck United and the financial information of Luck United shall continue to be consolidated into the consolidated financial statements of [Emperor Entertainment],” the statement read.
Emperor International and Emperor Entertainment pointed out that the sale of the shares was at a 40.67% discount on the consolidated net asset value of Luck United, as of August 31 of this year. According to the companies, “[t]he board of directors of both Emperor International and [Emperor Entertainment] believe that the Acquisition represents a tremendous opportunity to increase the stake in Luck United at a deep discount.”
Taken into account in negotiations was “the relatively low liquidity of the Sale Shares for [Luck United] not being a listed company.”
They noted that “[i]n recent years, [Luck United] continued to achieve a stable performance in entertainment and hospitality services in Macau and generate recurrent income stream for [Emperor Entertainment] and Emperor International.” Luck United posted a profit after taxation of HKD285.4 ($36.4 million) for the year ended March 31, 2018, a 39% increase from the preceding year.
Emperor International and Emperor Entertainment said, “The Acquisition can realise the expansion of such good investment opportunity. In addition, the Acquisition will enable [Emperor Entertainment] to utilize financial resources efficiently.”
Emperor International reported a profit for the year ended March 31 of HKD3.6 billion ($462.6 million), a 1.9% decrease from the year ended March 31, 2017. Its revenue from hotel operations and related services was HKD1.6 billion ($204.2 million), a 5.7% decrease from the previous year period.