Iao Kun revises Q2 loss figure due to bad debt provision

Iao Kun Group Holding Company, an operator of VIP rooms in Macau, said it expects its Q2 loss to be wider than previously forecast after a review of operations showed about $21.5 million in markers receivable may be at risk.

As a result, the company said it will take a non-cash provision for doubtful debts for the quarter and six months ending June 30th. It now expects its reported loss to be $125.8 million, or $1.99 percent per share, compared with a loss of $23.8 million, or $0.38 a share in the year earlier period.

Iao Kun had previously reported its Q2 net loss as being $104.4 million, or $1.65 a share. There is no change to its non-GAAP net loss.

The company has been hit by slumping VIP business in Macau and has been closing its VIP rooms to cut costs and pay down its doubtful debts.

Earlier this week, it said closed its VIP gaming room at Le Royal Arc Casino and announced that an accord to buy the Jeju Sun Hotel & Casino in South Korea from Bloomberry Resorts has expired. It now has just one VIP room in Macau.

Iao Kun said the latest closure will save it about $750,000 in annual costs. Earlier in September, the company announced it was also closing rooms at the Galaxy Macau and StarWorld casinos in an effort to generate annual savings of about $4 million.

“Because of the lengthening and difficulty of collecting markers receivable, the company will not be actively extending credit to its clients during this period and therefore it expects business volume to be minimal,” it said.