Bloomberry Sells South Korean Casino Jeju Sun To Junket Investor
Philippines-based casino operator Bloomberry Resorts Corporation has entered into an agreement to sell its South Korean casino Jeju Sun Hotel & Casino just after a year of purchasing the property. The company stated in a filing made to the Philippines Stock Exchange that it is selling the casino to a Macau-based junket operator Iao Kun Group Holding Company (IKGH) for KRW 117.5 billion or $102.3 million.
In a statement, brokerage firm Union Gaming said
Bloomberry has had a difficult experience operating in Korea, which ultimately resulted in this sale agreement, as well as the company pulling out of the Incheon RFP process last year.
As a part of the deal, Bloomberry’s subsidiary Solaire Korea Co Ltd will sell its 96.23 percent shareholding in Golden & Luxury Co. which operates the Jeju Sun to IKGH. The company had indicated in a filing made earlier last week that it was considering a sale of the property but had not confirmed it. Bloomberry purchased the casino in 2015 for P2.5 billion (US$53.7 million) as part of its strategy to expand beyond the Philippines but stumbled in its implementation. The casino was initially shut for renovations for five months, and later had to be closed once again for a month due to government penalties.
According to Morgan Stanley, the sale was a positive development since the Jeju property had been dragging the company’s performance down since its acquisition. It added that Bloomberry would now focus on developing its existing landbank in Silmi and Muui Island located close to Incheon Free Economic Zone where multiple large integrated casino resorts are under construction.
IKGH has made an initial payment of KRW 10 billion towards the sale, which will be held in escrow until the intervening processes such as due diligence and government approvals are completed. In its filing, Bloomberry said that IKGH was desirous of entering the South Korean market and is planning to bring its VIP customers to the casino.
IKGH operates junket operations at five gaming rooms in Macau. It also handles junket operations for Crown properties in Australia. Given the slowdown in Macau and the subsequent squeeze on junket operators, IKGH chairman Lam Man Pou has stated earlier that the company is seeking to diversify.
According Union Gaming IKGH’s decision to buy the casino property is in line with recent trends of junkets shifting from being agents to principals. Many junket operators are exploring such Greenfield opportunities that enable them to counter the plummeting VIP revenues in Macau and elsewhere.
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