Imperial Pacific to terminate Profit Transfer Agreement with Hang Seng

Smaller profits and the intention to prioritise resources for the new integrated resort on the Island of Saipan has led Imperial Pacific to announce its intention to terminate the profit share agreement with Macau junket Hang Seng. The decision was announced yesterday in a filing with the Hong Kong Stock Exchange.
During the first nine months of the year, gaming revenues in Macau from games of fortune declined 36.2 per cent to MOP275.94 billion (US$34.57 billion) from MOP176.02 billion for the same period of the previous year. The view of Imperial Pacific is that ‘the downturn of Macau gaming business is expected to continue’, which is expected to continue affecting the profit stream.
The profit stream receivable by Imperial Pacific amounted to HK$11.83 million during the first six months of 2014; this year, revenue amounted to approximately HK$6,000, according to the interim report of the company.
While the contract with Hang Seng was signed through the subsidiary Excel Earth the group was receiving 5 per cent of the junket profits in exchange for a consideration of HK$400 million in convertible notes.
‘The termination is in line with the Group’s intention to prioritise resources to develop the integrated resort business on the Island of Saipan’, the Board explained to investors.
With this decision, and because of the profit guarantee, Imperial Pacific is expecting to generate HK$221 million, because, among other reasons, of the profit guarantee for the period from 1 January 2015 to 31 December 2029. This amounted to a cash deposit of HK$376 million, which is said to be secured, and, according to the company, is non-refundable.