By Yvonne Lee and Kate O'Keeffe
HONG KONG--Two firms backed by Macau gambling mogul Lawrence Ho
have signed agreements to buy a controlling stake in a US$630
million casino-resort project in Russia, the latest country hoping
to attract China's prized high rollers.
Hong Kong-listed investment firm Summit Ascent Holdings Ltd.
(0102.HK) has agreed to buy a 46% stake in the project on the
outskirts of Vladivostok, while Melco International Development
Ltd. (0200.HK) will take a 5% stake, the companies said in a
statement Wednesday.
Two Russian businessmen primarily involved in the construction
business will own the remaining 49% of the venture, the statement
said without identifying the men. People familiar with the matter
said that the people, who have no casino experience, are
politically connected.
The news that an experienced Macau casino operator has plans to
build in Russia is a boost to the country's gambling industry,
which is rarely on the radar of gambling executives and bank
analysts due to corruption concerns and lack of clarity surrounding
casino the regulatory structure there. Investment opportunities in
the Philippine capital of Manila, another location where Mr. Ho is
building a casino, were met with similar skepticism initially but
many analysts have since come around on the idea.
Mr. Ho's companies cited Russia's proximity to northeast China,
its lack of a territorial dispute with China, its low tax rate and
Vladivostok's tourism potential as reasons for the investment.
The project hopes to attract Chinese high rollers, which
single-handedly transformed Macau into the world's largest gambling
market. The Chinese territory's $38 billion in gambling revenue
last year made it six times the size of the Las Vegas Strip.
Investors in Mr. Ho's casino companies have not yet reacted
positively to the plan. Shares in Melco Crown Entertainment Ltd.
(6883.HK), a joint venture backed by Mr. Ho and James Packer--the
sons of Macau gambling magnate Stanley Ho and the late Australian
casino-and-media magnate Kerry Packer--fell around 4% after the
deal was first reported by The Wall Street Journal last week.
Shares of Summit Ascent have been suspended from trading since
June 10 as the company discussed its new business model with the
Hong Kong stock exchange. The company, in which Lawrence Ho is the
largest shareholder with a 37.1% stake, will resume trading
Thursday.
Write to Yvonne Lee at yvonne.lee@wsj.com and Kate O'Keeffe at
Kathryn.OKeeffe@wsj.com
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