Property developer Lippo Limited has disposed of its entire interest in a joint casino project in Incheon, South Korea, with American casino operator Caesars Entertainment Corp., selling it to a new consortium between the latter and Chinese Guangzhou R&F Properties Co., Limited.
According to Lippo’s filing with the Hong Kong Stock Exchange last week, the whole consideration of the disposal totalled US$12.2 million (HK$94.7 million), while the aggregate amount received and receivable by Lippo will amount to some US$23.5 million.
In March 2014, the initial consortium between Lippo and Caesars – LOCZ Korea Corp. – was given the green light by the Ministry of Culture, Sports and Tourism of the Republic of Korea to design, develop, construct and own the gaming project in Incheon.
The joint venture comprised Lippo’s wholly-owned subsidiary Lippo Worldwide, partly-owned OUE International, and Caesars Entertainment’s subsidiary Caesars Korea.
‘Members of the consortium were unable to agree and finalise the investment in the project, the form that the company’s investment should take, and the terms of the definitive agreements governing the project,’ Lippo explained in the filing.
‘In view of the above uncertainties, the Board considers that the exit is beneficial to the group as it will release the capital which had been tied up in the project over the past few years for use for general corporate purposes of the Group,’ the developer added.
Last December, the company announced in its interim report that it had received “conditional approval” from the South Korean authorities for the exit, following the company entering into a memorandum of implementation with Caesars on the withdrawal in August the same year.
But the company’s intention to quit the project apparently came much earlier than that.
In December 2015, it released two filings saying the Korean casino project was clouded with ‘uncertainties’ as its consortium with Caesars had not mutually agreed on all the conditions in their conditional land sale and purchase agreement.
In March 2016, the company announced it was considering quitting the gaming development given that there was no certainty as to whether a final license for the project would be granted by the South Korean authorities, as well as in consideration of the gaming outlook in North Asia and the volatility of the global economy.
The original consortium between Lippo and Caesars planned to invest 743.7 billion won (HK$4.92 billion/US$61.3 million) in the first phase of the project by 2018, and a total of 2.3 trillion won for the whole project, which planned to include a foreigner-only casino, hotels, residential buildings, convention centres and a shopping mall.