Melco International Development Limited’s subsidiary Melco Gaming Assets Management (Korea) Limited has agreed terms to provide consultancy services for a casino to be developed in Jeju Island, South Korea, according to a filing with the Hong Kong Stock Exchange. New Silkroad Korea, a wholly-owned subsidiary of New Silkroad Culturaltainment Limited, owns a majority interest in the casino project – for which Melco will provide ‘consultancy, advisory and technical services, including with regard to the building, equipping and fitting-out of the Casino and the preparation and organisation of the Casino’s marketing activities,’ notes the filing. The fees payable by New Silkroad Korea for the ‘the first three years of the proposed arrangement’. amount to US$5 million (HK$38.8 million), with the fee to be ‘satisfied’ by the issuance of stock options to Melco Gaming or its designated party. The fee amounts to approximately 22.6 million shares at an issue price of HK$1.725 per share, representing approximately 1.00 per cent of the issued share capital of the company at the time of the announcement. The group announced that the three-year period coincides with the period required for the construction of the casino and that any additional technical services fees for further periods – if the casino is not completed in three years time – are ‘payable in cash’. The agreement still requires Melco Gaming to complete its due diligence regarding financial, legal and business affairs of New Silkroad Korea, ‘to the reasonable satisfaction of Melco Gaming,’ notes the filing. Mr. Su Bo, Chairman and Executive Director of New Silkroad, said that the partnership would enable the company to “benefit from the extensive experience and expertise of the respected international gaming brand, through its participation in the design and early-stage development of our mega-casino,” expecting the development to have the “highest standards in operations and internal controls” to allow the company to “diversify our business into overseas tourism real estate industry” and “grow into a larger and more sustainable company,” according to a press release published by the group. New Silkroad holds a 72 per cent equity stake in Development Golden Beach, awarded the eighth of eight gaming licences for Jeju Island, as well as operating a casino on the island, notes the release.
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