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Macau-based companies emerge frontrunners for all-cash takeover of Caesars

Niji Narayan

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Macau-based companies emerge frontrunners for all-cash takeover of Caesars
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A merger or sale looks imminent for American casino owner and operator Caesars Entertainment Corp, according to investor Carl Icahn, who is also a stakeholder of the company. If that happens, only three casino companies based in Macau will be able to manage an all-cash take-over, writes brokerage Sanford C. Bernstein Ltd.

In a recent note, Sanford C. Bernstein Ltd suggests that Wynn Resorts Ltd, MGM Resorts International, and Las Vegas Sands Corp are the only firms that have a realistic chance of all-cash takeover.

These firms have subsidiaries based in Macau: Wynn Macau Ltd, MGM China Holdings Ltd, and Sands China Ltd, respectively.

Sanford Bernstein analysts Vitaly Umansky, Kelsey Zhu, and Eunice Lee wrote that smaller U.S. based suitors, such as Eldorado Resorts Inc. and Penn National Gaming Inc., had no liquidity and lots of debt, and could do only a reverse merger for stock. “There could be cash funding created via asset sales (but a large portion of the Caesars Entertainment asset base has already been sold),” the note said.

Each of the three potential cash suitors for Caesars Entertainment – as defined by Sanford Bernstein – are looking to expand into Japan, where the first legal casinos will be opened in the next few years. On that basis, Sanford Bernstein said it did not think any of the trio were likely to go after Caesars Entertainment.

“With the Japan opportunity coming up (where we are talking about US$8-billion to US$10-billion-sized development projects) – we do not believe Las Vegas Sands, MGM Resorts or Wynn Resorts (who are also the more likely candidate to be able to be awarded a licence in Japan) would be interested in picking up Caesars (and not just for reasons tied to Japan) and gaining more exposure to the U.S. regional market and Las Vegas,” the report said.

Asia

Study Confirms High Rollers Gambled in Macau Despite COVID-19

Niji Narayan

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Study Confirms High Rollers Gambled in Macau Despite COVID-19
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A new study released by the Macau Research Centre has found that 60% of those who visited Macau during the COVID-19 pandemic did so for gambling, with each willing to spend around MOP$87,000 on average.

The research centre surveyed 103 visitors between March and May, of which 93.2% were from mainland China. With the threat of a 14-day quarantine upon leaving Macau, research showed those mainlanders chose to stay longer, with an average stay of 6.7 days. Around 59% stayed for more than five days.

The study also found that 59% of those surveyed visited Macau for gaming, while 87% had conducted gaming activities. Their gaming budget ranged from MOP$1,000 to MOP$500,000, with an average of MOP$87,000.

“Compared to the mass market, the spending decisions of this group of high-end customers may be less influenced by macroeconomic and social sentiment,” the study said.

Moreover, the visitors spent another MOP$45,549 during their visits on average, mostly on dining, shopping and hospitality.

The study also found the arrivals had visited Macau an average of 5.8 times in the last 12 months, while 83% of them had visited Macau at least three times in the last 12 months.

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Asia

Macau Gambling King Stanley Ho Dies at 98

Niji Narayan

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Macau Gambling King Stanley Ho Dies at 98
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Macau casino king Stanley Ho has died on Tuesday (May 26) at the age of 98. He was known as the godfather of Macau casinos and was instrumental in turning Macau into a gambling boomtown.

The flamboyant tycoon, who loved to dance but advised his nearest and dearest to shun gambling, headed one of the world’s most lucrative gaming businesses through his flagship firm, SJM Holdings Ltd, valued at about US$6 billion.

Ho spearheaded what is known in Macau as the junket VIP system, whereby middlemen act on behalf of casinos by extending credit to gamblers and taking responsibility for collecting debts.

Some of Ho’s children have become successful gaming operators in their own right. Daughter Pansy is the co-chairperson of MGM Resorts’ Macau unit while son Lawrence runs Melco Resorts & Entertainment.

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Asia

Asia Pioneer Entertainment Terminates Two Lease Agreements

Niji Narayan

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Asia Pioneer Entertainment Terminates Two Lease Agreements
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Asia Pioneer Entertainment (APE), the Macau-based slot machine agent, has terminated two finance lease agreements for the leasing of electronic gaming equipment (EGE). The agreements were terminated after Siam Star Leisure and GLIMEX failed to pay lease rental of around HK$17 million and HK$9 million, respectively.

APE said the group is now expected to write off the HK$26 million finance lease receivables from its 1H20 accounts and has demanded the return of the leased equipment.

Under the terms of the lease agreements, both signed in December 2018, APE has the right to terminate “without the need for any notice or demand” if the lessees fail to make any payment for equipment rental by the due date.

“The Company intends to identify new lessees for the EGE in Macau or other Southeast Asian countries,” APE said.

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