Bloomberry Resorts Denies Sale Extension of Jeju Casino
Philippine casino operator Bloomberry Resorts has issued a clarification refuting the claim made by junket operator Iao Kun Group Holding Company (IKGH) that an extension to conclude a sale deal has been provided.
Back in June 2016, Macau-based IKGH and Bloomberry had agreed on a tentative agreement, under which IKGH would purchase Jeju Sun Hotel & Casino, a casino property located in the Jeju Island in South Korea for $102.6 million. The deal was to have been closed in 45 days.
But in an analyst call held last week, IKGH director Jim Preissler said that as a result of financing difficulties, the period to conclude the sale had been extended after Bloomberry agreed to give IKGH more time to raise the necessary finances. Responding to this, early this week Bloomberry filed a notice with the Philippine Stock Exchange declaring that the company had not agreed to extend the closure date for the sale deal with IKGH.
IKGH hasn’t responded to Bloomberry Resorts statement so far. For IKGH, the casino purchase was an attempt to diversify and move away from its heavy reliance on the declining junket business in Macau.
This the second time in the past month that IKGH’s public statement has been contested –on Sept. 13 the company had announced the closure of two VIP rooms in Macau being operated in Galaxy Entertainment owned casinos. The reason for the closure according to IKGH was cost cutting but Galaxy followed up with a statement saying that it had in fact terminated the partnership with IKHG for breach in agreements.
IKHG has been struggling ever since Macau’s VIP business was severely hit due to the Chinese government’s anti-corruption campaign. The company’s second quarter results for this year which was released recently had shown a revenue drop of 52 percent to $10.6 million for the three months ending June 30, and net losses amounting to $104.4 million.
The company has however said that these losses are due to a one-time charge of $97.3 million against intangible assets, without which the loss would have been contained to $3 million. IKHG has forecasted VIP turnover for the full year at between $2.5 billion and $3 billion this year, although Preissler has indicated that its new junket venture with Australia’s Crown Resorts is not likely to contribute to revenue growth in a meaningful way.
With its stock price going below $1, NASDAQ has asked the company to bring it back over the minimum limit barring which the stock would be delisted.
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