Friday, September 26, 2014

Aquis listing in Hong Kong?

A report in the AFR that while the Friendly Fung Family will fund the Reef Casino acquisition they would "tap debt and equity markets to fund the construction of Aquis": Tony Fung eyes Asian markets for Cairns casino capital

Tony Fung hopes to tap Asian equity markets in 2016 to fund the $8 billion construction of a mega casino resort in Cairns, by partially listing his development company Aquis on the Hong Kong stock exchange.
Mr Fung would not say how much cash he would seek to raise in the listing, which would see Aquis compete with giants of the global gambling industry, like the James Packer-backed venture Melco Crown.
However, the 62-year-old financial services veteran said he expected strong support from investors if he could prove himself as a successful operator of a casino.
A measure of his success will be to more than quadruple earnings within two to three years at the Cairns Reef Casino, which looks likely to be acquired by Aquis in a $270 million deal by November. The casino’s controlling company, the Reef Casino Trust, had earnings before interest, tax, depreciation and amortisation of $14 million in the 2013 financial year and Mr Fung said a result of $20 million this year seems possible.
“I think if we in the next two or three years, if we can bring ourselves an EBITDA of $80 million . . . the chances of us getting it financed, without me ­giving up too much equity, would be very high,” he said.
Curious about the 2016 date and timeline there and whether that signals a delay from previous statements if that is to be the source of capital to fund construction? As suggested in a previous post, capital market conditions could be a factor in Aquis funding. Hong Kong listed casino stocks have turned into something of a bloodbath this year which has extended further in recent days.

Melco-Crown is now down over 40% from it's high flying peak earlier in the year: Macau Casino Stocks Slump as CLSA Predicts Revenue Drop; Macau mired in cold streak; & also Trouble is brewing in the world's biggest gambling hub.

The downturn in Macau gaming revenue may be extending into something longer and deeper than initially anticipated so it may take a while for buoyant conditions to return for casino stocks. Monthly data for September from the Macau gaming authority should be due next week. The quarterly data could be more interesting with a breakdown between different games and most particularly the split between VIP baccarat and baccarat. Macau is pretty much all baccarat, not pokies.

1 comment:

  1. The problem with listing the company on the stock market is that he has applied for the license as an individual? So he will get the most "at risk" unsecured funding from penny dreadful lovers so the bank funds can provide secured funding arrangements. .So the chances of AQUIS ever happening as described is about nil. Same as before.?

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