The Philippines’ Bloomberry Resorts Corporation said it’s selling its Jeju casino property in South Korea for about $102.3 million, a little over a year after it first acquired the resort.
The company said in a filing to the Philippine Stock Exchange that it will sell its 96.23 percent shareholding in Golden & Luxury Co. – the owner and operator of the Jeju Sun Hotel & Casino – in a transaction worth KRW 117.5 billion, which includes the shares and a shareholder loan.
“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,” said Union Gaming in a note.
Morgan Stanley said they viewed the sale as positive, “as Jeju Sun has been a key drag on Solaire’ s earnings since acquisition,” adding that “further investments are unlikely currently but the company said it will look at opportuniities to develop its landbank at Silmi and Muui Island, potentially with other partners, starting early 2017 when the bridge from Incheon to Muui and Silmi Island is completed.”
The company announced in March last year it was buying the Jeju property and other assets in a push to expand outside of the Philippines. According to its 2015 financial statement, the group acquired Jeju Sun for P2.5 billion (US$53.7 million), agreeing to buy the 20.96 hectares (51.79 acres) Silmi Island covered by the Incheon Free Economic Zone west of Seoul and in January agreed four deals with landowners on Korea’s Muui Island.
Thursday’s sale agreement is subject to several conditions including the satisfactory results of a due diligence that Iao Kun will conduct on the shares to be sold, G&L, and its assets and business.
It is also subject to the approval of other government authorities, said the filing.
Bloomberry said the other details will be disclosed if and when the transaction is completed within the next 45 days.
“Iao Kun desires to enter into the Jeju market and is confident that it can attract its Chinese VIP customers to Jeju Island. Solaire Korea, on the other hand, intends to focus its effort on the development of its property in Muui and Silmi Islands,” said the casino operator.
Last week, Bloomberry said it was considering selling its Jeju business in order to “eliminate the drag on its operations.”
At the time, the operator mentioned it was just one of the options being considered to “plug the financial hemorrhage from South Korea.”
Union Gaming says IKGH’s pending acquisition of the Jeju resort is the third example of junkets attempting to transition from being agents to principals. “We believe other junkets are exploring similar acquisition opportunities and / or are looking to create their own greenfield opportunities overseas,” said the brokerage.