Iao Kun Group Holding Company Limited Provides Additional Details on Its Announced Acquisition of the Jeju Sun Hotel & Casino in Jeju, Korea
HONG KONG–(BUSINESS WIRE)–Iao Kun Group Holding Company Limited (“IKGH”) (NASDAQ:IKGH), which
operates through its subsidiaries and related promotion entities that
act as VIP room gaming promoters and a collaborator, today provided
additional details on its announced acquisition of the Jeju Sun Hotel &
Casino in Jeju, Korea.
Consideration and Financing
The acquisition consideration includes the real property, on which the
Jeju Hotel & Casino is situated, as well as a non-expiring gaming
license, which allows for an unlimited number of gaming tables that may
be installed, subject to regulatory approval. IKGH shall be the first
Macau gaming operator to have a gaming license in Jeju, and ownership of
the gaming license will be an additional valuable asset for IKGH as it
can be transferred to other potential locations in Jeju.
IKGH expects to finalize its funding arrangements for the acquisition
within the next few weeks. The company expects hotel and gaming
operations to generate positive cash flow post-acquisition. Further,
IKGH believes that the funding structure to be finalized should cause
the acquisition to be accretive to earnings per share.
Selecting Jeju
IKGH has consistently noted that it has been seeking to diversify its
operations outside of Macau. After a comprehensive review of
opportunities, the company focused its efforts on the rapidly expanding
market of Jeju, Korea. Jeju provides excellent accessibility from the
Chinese Mainland, with many daily flights from the major Chinese cities.
In addition, all Mainland Chinese can travel to Jeju visa-free, making
it an ideal destination for Chinese travelers and casino patrons. Jeju
also has a low gaming tax rate compared to other jurisdictions (the
gaming tax is paid net of junket commissions and other expenses and will
be typically be below 15% of net gaming revenue).
In addition, IKGH sees significant potential to rapidly grow VIP
operations on the island, given that VIP gaming in Jeju is currently
underdeveloped. Upon reviewing potential opportunities, IKGH determined
that the acquisition of the Jeju Sun Hotel & Casino and obtaining the
non-expiring gaming license was the optimal way to diversify outside of
Macau given the quality of the property and its close proximity
(five-minute drive) to Jeju International Airport.
Hotel and Casino Management
In order to ensure a successful and value-added acquisition, it is
imperative to have the proper teams in place to properly manage the
property and casino and provide the customer with a first-class
experience. In addition to the Jeju Sun Hotel management team that will
continue to run the property as previously discussed, IKGH is currently
negotiating and is confident that it will have a deeply experienced
professional gaming team in place to manage the casino operation
post-acquisition.
Forward-Looking Statements
This press release includes forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 that involve risks and uncertainties. Forward-looking
statements are statements that are not historical facts. Such
forward-looking statements, based upon the current beliefs and
expectations of IKGH’s management, are subject to risks and
uncertainties, which could cause actual results to differ from the
forward-looking statements. The gaming industry is characterized by an
element of chance. Theoretical win rates for IKGH’s promotion entities’
VIP gaming room operations depend on a variety of factors, some beyond
their control. In addition to the element of chance, theoretical win
rates are also affected by other factors, including gaming patrons’
skill and experience, the mix of games played, the financial resources
of gaming patrons, the spread of table limits, the volume of bets placed
by IKGH’s promotion entities’ gaming patrons and the amount of time
gaming patrons spend on gambling — thus VIP gaming rooms’ actual win
rates may differ greatly over short time periods, such as from quarter
to quarter, and could cause their quarterly results to be volatile.
These factors, alone or in combination, have the potential to negatively
impact the VIP gaming rooms’ win rates. Investors and potential
investors should consult all of the information set forth herein and
should also refer to the risk factors set forth in IKGH’s Annual Report
on Form 20-F filed in March 2016, and other reports filed or to be filed
from time-to-time with the Securities and Exchange Commission.
About Iao Kun Group Holding Company Limited
IKGH is a holding company which operates through its subsidiaries and
related promotion entities that act as VIP room gaming promoters and a
collaborator, and is entitled to receive all of the profits of the VIP
gaming promoters and a collaborator from VIP gaming rooms. IKGH’s VIP
room gaming promoters and collaborator currently participate in the
promotion of five major luxury VIP gaming facilities in Macau, China,
the largest gaming market in the world. One VIP gaming room is located
at the top-tier 5-star hotel, the StarWorld Hotel & Casino in
downtown Macau, and another is located in the luxury 5-star hotel, the
Galaxy Macau™ Resort in Cotai, each of which is operated by Galaxy
Casino, S.A. Additional VIP gaming rooms are located at the Sands Cotai
Central and City of Dreams Macau, both in Cotai, and Le Royal Arc
Casino, located in NAPE, Downtown Macau. IKGH recently started trial
operations to the Australian casinos (Crown Perth Casino in Perth,
Australia and the Crown Melbourne Casino in Melbourne, Australia) to
gain a greater understanding of the preferences of its junket agents and
VIP players and the logistics of the market.
Contacts
Iao Kun Group Holding Company Limited
Ryan Yip, +853 2782 3425
ryany@ikghcl.com
