GGRAsia – Caesars Ent evaluating South Korea scheme spend: CFO

Caesars Ent evaluating South Korea scheme spend: CFO

Nov 06, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck

United States-based casino firm Caesars Entertainment Corp is “currently evaluating” the spend on its South Korea project.

So said Eric Hession, the group’s chief financial officer, in a third-quarter earnings call with analysts on Tuesday.

The brand is developing with a partner – Guangzhou R&F Properties Co Ltd – a mixed-use resort called Caesars Korea (pictured in an artist’s rendering) at Incheon, near South Korea’s main international airport.

According to Caesars Korea’s website, the project would include a foreigner-only casino and a hotel and serviced apartments offering more than 720 rooms, suites, and villas.

“Total investment” in the project is put at KRW850 billion (US$735 million) according to the website, which adds that gross floor area is put at 172,249 square metres (1.85 million square feet).

Caesars Entertainment’s CFO did not mention on the latest earnings call what his firm’s capital commitment was to the scheme.

But he noted regarding the group’s likely capital expenditure commitments for 2019 as a whole, it expected “approximately US$275 million to US$295 million for development-related capex”. Most of that would be for the Caesars Forum project in its main market in Las Vegas, Nevada, and for investments in U.S. sports books. “This range excludes spends for the Korea project which we are currently evaluating,” he added.

Caesars Korea has been the subject of analyst speculation, amid news that a regional U.S. casino firm – Eldorado Resorts Inc – was to stage a US$17-billion bid to take over the Caesars Entertainment parent. The matter is to be put to shareholders of both groups later this month.

In June, after news emerged of the possible deal, Tom Reeg, the chief executive of Eldorado Resorts, was quoted by the Associated Press as saying “no firm decisions” had been made regarding international – i.e., non-U.S. – investment, but that the opportunity would have to be “stupendous for us to be running in that direction”.

RFCZ Korea Corp, the entity that owns the South Korean resort project, confirmed in an email to GGRAsia in response to our enquiry – made prior to the earnings call – about progress on Caesars Korea: “The construction works are ongoing. Civil construction and foundation works have been completed, and steel structures are going up now. The construction progress rate is over 20 percent.”

RFCZ Korea added: “We completed the payment for land in June 2018, and currently own its title.”

A predecessor entity to RFCZ Korea received back in March 2014 indications from South Korea’s Ministry of Culture, Sports and Tourism that it could develop and operate a so-called integrated resort with foreigner-only casino; at Midan City on Yeongjong Island, located in the Incheon Free Economic Zone.

Caesars Entertainment has a big presence in Las Vegas, including via Caesar’s Palace but missed out on bidding for a Macau licence – for the currently high-growth Asia Pacific region – at the time of Macau market liberalisation at the start of the current century.

In late August Caesars Entertainment said it was dropping plans to bid for one of the first casino licences in Japan. The firm said in a press release it was instead focusing on “current” expansion plans.