oth GCAS and Apollo had separately submitted their applications for “provisional statement”, and both have been approved in principle.
Under the casino agreement, the duo agreed that only Apollo will submit the application for the second stage now. If Apollo eventually succeeds in obtaining the casino licence, it will later transfer it to GCAS for a consideration of us$ 7.8 million (plus applicable taxes).
Consequently, GCAS will then be the sole owner and operator of the single large casino in the Docklands area in Newham, one of the sites for the 2012 London Olympics. Subject to the grant of the casino licence, GENM said the works on the casino project would start by third quarter 2012, with the casino planned to be opened in 2013.
Apollo is a UK-based privately owned company involved in leisure and entertainment developments in Europe.
In the announcement, GEM said the outcome of Apollo’s Stage 2 application is expected to be known in February next year. “If selected, GCAS expects the only ‘large’ casino in Newham to be a successful future addition to GENM’s 46 existing casinos in the UK,” said GENM, which recently spent us$ 535.6 million cash to acquire its sister company’s, Genting Singapore plc, casinos in the UK.
According to GENM, the gambling legislation introduced by the British Gambling Commission in 2005 allows for only a limited number of new licences to be granted by selected local authorities, comprising eight “large” and eight “small” casinos. On top of building the “large casino”, GENM is also keen on property and leisure developments in Newham.
On this, GENM’s indirectly wholly owned unit Genting Ibico Holdings entered into joint venture agreement with Apollo “to develop and operate a leisure entertainment destination and exploit Olympic Festival Village opportunity”, the announcement said.
Both GIbico and Apollo will hold a 50% equity interest in the joint venture with each party initially contributing us$ 4.6 million to the venture.
GENM said GIbico intended to collaborate with Apollo to develop and operate the Leisure Destination, which would proceed irrespective of the success of Apollo’s application for the casino licence. The leisure facilities development is expected to be opened after the end of the London Olympics 2012.
Given the latest string of acquisitions and expansion plan, analysts said it seemed that the UK could be an important base for GENM, which currently generates its revenue from the hilltop casino in Genting Highlands. But analysts said it was still pre-mature to gauge the earnings from the new venture given the lack of details on GENM’s new casino plan.
GENM’s president and COO Datuk Lee Choong Yan told The Edge earlier that the group was confident in turning around the UK business, which has been bleeding badly since it was acquired by Genting Singapore. “We don’t foresee real difficulties in growing the business in London given the 40-years of experience we have gained in running a casino,” Lee commented.
The share price of the casino operator has underperformed the broad market due to delays in utilising its growing cash pile of over us$ 1.60 billion, and neither did it reward shareholders with dividends. However, the stock seems to have sprang back to life since late August after the group received shareholders’ approval to take over the UK casino business from Genting Singapore.