Lippo/Caesars Korea project on shaky ground, no accord as of deadline

Hong Kong-listed Lippo Group said that there is doubt over whether its plan for an integrated resort in South Korea with Caesars Entertainment will proceed, after parties failed to resolve outstanding issues by a Dec. 31st deadline.

In a filing with the Hong Kong Stock Exchange, Lippo said consortium members have not been able to satisfy conditions relating to the acquisition of land targeted for the resort. Discussions are continuing with a view to either reaching an accord, or extending the deadline for negotiations.

“There is no assurance that such discussions and negotiations will result in any agreement, in which case the Project will not proceed,” it said.

Aside from the issue of the acquisition of the land, Lippo said there were other uncertainties including whether the members of the consortium are able to agree and finalize their investment, the form that the company’s investment will take and entering into definitive agreements on mutually agreeable terms.

“Further, the Preliminary Review Approval is conditional and accordingly there is no certainty as to whether the final licence will be granted,” it added.

Lippo, together with Caesars Entertainment and Singapore’s OUE Ltd received preliminary approval to build a foreigner-only integrated tourism resort in March last year. The casino will be located near the country’s main international airport on Yeongjong island and is expected to cost around 2.3 trillion won ($2.2 billion). It will be built in stages and will be ready in time for the 2018 Winter Olympics in Korea, the companies said at the time.

Enthusiasm for the prospects of South Korea’s casino industry has dimmed recently as China’s anti-corruption drive grinds on, with operators seen highly dependent on visitation from China.

An initial field of about 34 bidders for two casino licenses being offered by the government may have shrivelled to just six by the December deadline, according to some media reports.

In November, Hong Kong-listed NagaCorp and Grand Korea Leisure said they will not participate in a bidding process for one of two integrated resort licenses being offered by the South Korean government, due to concern about the economic viability of the projects.