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Saturday, 29 November 2008
Neptune’s HK$4.3b Junket Deal May Collapse on Stock Downturn
Macau gambling junket investor Neptune Group said its HK$4.32 billion deal to launch a massive VIP junket operation at Galaxy Entertainment Group’s StarWorld casino hotel was in danger of collapsing because of the stock market downturn.
Neptune’s HK$4.3b Junket Deal May Collapse on Stock Downturn
Neil Gough 28 November 2008
Macau gambling junket investor Neptune Group said its HK$4.32 billion deal to launch a massive VIP junket operation at Galaxy Entertainment Group’s StarWorld casino hotel was in danger of collapsing because of the stock market downturn.
Neptune in July announced Macau’s most ambitious junket deal to date, saying it would pay HK$4.32 billion for a holding company that received 0.45 per cent of VIP chip sales by Luck Star, a junket registered to Macau citizen Choi Tai-wai.
Mr. Choi’s junket operation had signed a deal with Galaxy to operate “not less than” 100 gaming tables on a new high rollers’ gaming area at StarWorld. After the purchase, Neptune would lend up to HK$6 billion back to Mr. Choi, allowing him to issue credit to partner junket agents and high rollers to boost gaming volumes. But that deal now looks like a non-starter as Neptune has so far failed to raise the funds to complete the purchase.
“The company is undercapitalised for this project,” Neptune said late Wednesday in its results announcement. “The dire situation would seriously jeopardise our ability to ... loan to Mr. Choi if we cannot raise capital resources from the strained financial market.”
By June 30, Neptune had net current assets of HK$379.03 million, including cash and bank balances of HK$39.42 million.
The company’s HK$4.32 billion outlay for the junket deal was approved by 100 per cent of voting shareholders at an extraordinary general meeting last month. The price tag on Mr. Choi’s Luck Star was to be met with an HK$50 million cash deposit, HK$275 million cash on completion, a HK$1.2 billion promissory note and HK$2.795 billion in new shares.
The deal called for new shares to be sold at 45 HK cents each, subject to a cap of 19.99 per cent of the firm’s existing share capital per placement. That seems improbable now as Neptune’s shares closed yesterday at 3.8 cents each, 91 per cent below the proposed placement price.
Neptune’s shareholders authorised the issue of up to 6.21 billion new shares, which at yesterday’s closing price would represent gross proceeds of just HK$236 million, well below the HK$2.795 billion contribution called for under the junket deal.
Mr. Choi’s junket last month started formal operations on 39 tables at StarWorld, but delivery of a HK$6 billion loan from Neptune to boost gaming volumes looks highly doubtful given the circumstances.
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Neptune’s HK$4.3b Junket Deal May Collapse on Stock Downturn
Neil Gough
28 November 2008
Macau gambling junket investor Neptune Group said its HK$4.32 billion deal to launch a massive VIP junket operation at Galaxy Entertainment Group’s StarWorld casino hotel was in danger of collapsing because of the stock market downturn.
Neptune in July announced Macau’s most ambitious junket deal to date, saying it would pay HK$4.32 billion for a holding company that received 0.45 per cent of VIP chip sales by Luck Star, a junket registered to Macau citizen Choi Tai-wai.
Mr. Choi’s junket operation had signed a deal with Galaxy to operate “not less than” 100 gaming tables on a new high rollers’ gaming area at StarWorld. After the purchase, Neptune would lend up to HK$6 billion back to Mr. Choi, allowing him to issue credit to partner junket agents and high rollers to boost gaming volumes. But that deal now looks like a non-starter as Neptune has so far failed to raise the funds to complete the purchase.
“The company is undercapitalised for this project,” Neptune said late Wednesday in its results announcement. “The dire situation would seriously jeopardise our ability to ... loan to Mr. Choi if we cannot raise capital resources from the strained financial market.”
By June 30, Neptune had net current assets of HK$379.03 million, including cash and bank balances of HK$39.42 million.
The company’s HK$4.32 billion outlay for the junket deal was approved by 100 per cent of voting shareholders at an extraordinary general meeting last month. The price tag on Mr. Choi’s Luck Star was to be met with an HK$50 million cash deposit, HK$275 million cash on completion, a HK$1.2 billion promissory note and HK$2.795 billion in new shares.
The deal called for new shares to be sold at 45 HK cents each, subject to a cap of 19.99 per cent of the firm’s existing share capital per placement. That seems improbable now as Neptune’s shares closed yesterday at 3.8 cents each, 91 per cent below the proposed placement price.
Neptune’s shareholders authorised the issue of up to 6.21 billion new shares, which at yesterday’s closing price would represent gross proceeds of just HK$236 million, well below the HK$2.795 billion contribution called for under the junket deal.
Mr. Choi’s junket last month started formal operations on 39 tables at StarWorld, but delivery of a HK$6 billion loan from Neptune to boost gaming volumes looks highly doubtful given the circumstances.
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