Thursday, June 26, 2014

A quick look at the Gold Coast casino consortium

As a diversion from Aquis I decided to have a look at the Consortium given the nod for the Gold Coast casino licence. This is the ASF Consortium led by ASF Group which is an ASX listed company (ASX:AFA) and describes itself thus:
ASF is unique among ASX-listed public companies in Australia. It is a Sino-Australian investment and trading house which focuses principally on the identification, incubation and realization of opportunities in areas of synergy between China and Australia including resources, property, infrastructure, travel and financial services sectors.
ASF Group listed on the ASX in 2007. The principal investment focus has been resources. Since listing ASF has raised a total of more than $70 million in equity. At December 31, 2013, it reported accumulated losses of more than $50 million and net assets of just $17 million.

That position was after the 2013 annual accounts scored a going concern qualification from the auditor. It subsequently raised more than $13 million in equity in the half year to December 31 though share placements, a 1-for-2 rights issue, and exercise of a convertible loan from a company called Star Diamond Developments Limited.

Star Diamond has provided funds under a convertible loan facility a number of times with interest "payable at the rate of 1% per month, accrued monthly." At June 30 last year, prior to any equity conversions, the outstanding exposure to Star Diamond had accumulated to $9.77 million.

Despite an apparent appetite for capital ASF has also been undertaking a share buy-back to "enhance shareholder value" although this is not large. The stock is thinly traded with Chinese names prominent among the top 20 holders.

This hardly seems like a company with the financial strength or background to undertake a $7.5 billion project, but never mind there are others in the consortium.

With major casino operators all pursuing expansion plans elsewhere around the world, including our indigenous Crown and Echo scrapping over the new Brisbane development, the names behind the two regional proposals stand out as something of an odd duo.

No wonder it has been suggested both should look for further partners!

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