Macau Legend Development Ltd says it will explore its options with a view to continuing the management of Macau casinos Legend Palace and Babylon – both located at Macau Fisherman’s Wharf – once current concession contracts expire on 31 December 2022.
This is despite auditors issuing a Disclaimer of Opinion on “Multiple uncertainties” relating to the group’s ability to continue as a going concern, with Macau Legend announcing on Tuesday a loss of HK$1.19 billion (US$152 million) in FY21, narrowed from a loss of HK$1.96 billion (US$250 million) in 2020.
Amendments to the governance of satellite casinos form a key part of Macau’s new gaming law, which was passed by the Legislative Assembly last week, with satellites no longer allowed to participate in revenue share arrangements with concessionaires after a three-year transitional period for existing satellite casinos. A number of satellites have either announced plans to close down or their operations assumed by their related concessionaire.
Macau Legend, which operates its casinos under the license of SJM Resorts, said Tuesday it will “explore various options to continue the provision of management or any other forms of services related to the gaming operation at Babylon Casino and Legend Palace Casino after 31 December 2022 to the extent permitted by relevant laws and regulation of Macau, and will maintain close contact with SJM in this regard.”
Noting that the new gaming law will impact the operations of its subsidiary Hong Hock, the company added, “As a provider of casino management services focused on mass market customers and satellite casinos, Hong Hock has a strong reputation and is well established in the gaming industry, proving that its casinos outperform some of the other satellite casinos. Hong Hock is committed to continuing to provide effective casino management services and will continue to focus on developing and identifying partnership opportunities, as well as contributing to the gaming industry in Macau within the constraints of the new law.”
Although Macau Legend saw its group-wide revenues increase 62% to HK$1.14 billion (US$145 million) in 2021, with gaming revenues up 74% to HK$917.3 million (US$117 million), auditors said they were unable to form an opinion on the company’s financial accounts due to “potential interaction of the multiple uncertainties and their possible cumulative effect.”
The auditors noted that Macau Legend’s total bank borrowings amounted to HK$2.36 billion (US$301 million) as of 31 December 2022 of which HK$207 million (US$26 million) will be due for repayment within the next 12 months, while the group’s cash and cash equivalents amounted to just HK$133 million (US$17 million).
This indicates the existence of material uncertainties that may cast significant doubt on the group’s ability to continue as a going concern, it added.
Macau Legend, whose former CEO Levo Chan stepped down in January after being arrested and charged with criminal organization, illegal gambling and money laundering, recently revealed the company was planning to lay off 16% of its workforce.
