GGRAsia – NagaCorp mulls public offering for Russian casino

NagaCorp mulls public offering for Russian casino

Nov 03, 2014 Newsdesk Interviews, Latest News, Rest of Asia

Cambodian casino operator NagaCorp Ltd says it is considering a public offering to help fund its “US$369-million” casino project in the Russian Far East.

The firm is already listed on the Hong Kong Stock Exchange.

Tim McNally (pictured), chairman of NagaCorp, told GGRAsia in a telephone interview from the United States: “We are dealing with some well-known international financial groups, and we will explore a lot of different options – including the possibility of a public offering.”

He declined to comment on where such a listing might be, stating the offering idea was still at the discussion stage.

The chairman added that were NagaCorp to use that route for the Russian scheme, it “would likely” be to provide finance for the entire project.

Were the casino operator to choose a different financing route, it might be funded phase-by-phase over three stages, including an element of debt funding, he added.

“We’re totally confident that we’ll be able to fully fund the entire project,” Mr McNally told us.

NagaCorp had previously stated – following the autumn 2013 announcement of its Russian investment agreement – that the resort would have 100 gaming tables, 500 electronic machines, a large theatre facility to accommodate 2,000 people as well as entertainment offerings such as a karaoke complex and spas.

Mr McNally told GGRAsia the first phase was likely to cost between US$50 million and US$70 million.

“We’re still in the process of evaluating that. What we’re not going to do is a Wynn- or Sands-style opening like in Macau where there’s a grand opening. We’re going to try and build the complex, get the gaming facility and hotel open and then keep adding on until we complete our vision and our master plan,” explained the NagaCorp chairman.

That would include entertainment and shops in phases two and three, he stated.

Mr McNally said the company was “hopeful of some kind of approval” from the Russian authorities for the whole scheme during 2015.

“We’re hopeful we could have some kind of ground breaking at the end of the first half [2015 or] beginning of the second half.

“Once we get through the approval process, I think things can move at a more predictable pace,” he added.

Top architect

The casino complex is being designed by U.S. architect Paul Steelman, whose company has been involved in many gaming projects in Asia, including Sands Macao, Galaxy Macau, Solaire Resort and Casino in the Philippines and The Grand, Ho Tram, Vietnam.

Asked if it were likely phase one could be open before 2018 – a date mentioned previously by the company – Mr McNally said: “As soon as we get approval, I’m sure the Primorsky [Krai regional] government would like to see us get something open as well.

“[The year] 2018 was certainly a date we had talked about in concert with the Primorsky government. This is a new initiative for that province – the reinstatement of [casino] gaming in Russia – so we’ve got to be patient with the process.”

In September, Hong Kong-listed Summit Ascent Holdings Ltd, which is developing its own casino resort in the same Primorsky Integrated Entertainment Zone (IEZ), near the port city of Vladivostok, said Summit Ascent’s completion date had been put back to April 2015.

Summit Ascent – controlled by Macau casino developer Lawrence Ho Yau Lung – had previously said the first phase of the project was targeted to open in the fourth quarter of this year.

In July 2009, the Russian authorities ordered the overnight closure of all the existing casinos in the country – a move the Reuters news agency reported at the time threatened a third of a million jobs.

Since then, the federal government has reinstated the right to open casinos in certain areas.

In July, Russian President Vladimir Putin signed a law allowing the establishment of gambling zones in the Black Sea city of Sochi and in Crimea – a territory Moscow annexed from neighbouring Ukraine in March after an uprising by ethnic Russian separatists – in a bid to fund regional development via casino fees and taxes.

Little guy

Mr McNally of NagaCorp also spoke in the interview about the business development for the group, which is building a new phase for its flagship property NagaWorld in the Cambodian capital Phnom Penh. In August, the firm said Naga2 will include more than 1,000 new hotel rooms and luxury suites, up to 300 gaming tables and 500 electronic gaming machines.

Also in August, the firm said it was finalising contracts with eight new junkets, including some from Macau. Additionally, on October 27, a new air service was inaugurated between Macau and Phnom Penh using two aircraft leased from NagaCorp.

“That seems to be going well,” Mr McNally told us. “According to my most recent information, there seems to be some strong business [on that route] for November.”

Mark Brown – a former president of the Venetian Macao and also of Sands Macao from April 2006 to April 2009 – joined NagaCorp in December 2013 with a brief including developing business relationships for the firm’s international VIP business. On October 26 NagaCorp announced he had resigned to “pursue other opportunities”, but gave no further details.

But Mr McNally told us in the interview: “Mark did an outstanding job in terms of developing the foundations of the [VIP segment’s] relationships. Mark was really pleased to be able to come and work with us in Cambodia. But [if not] for a very unique [new] opportunity for him, he would have stuck on.”

The NagaCorp chairman said he had not yet been replaced, but explained: “We’re in process of looking for a potential suitable candidate – a strong experienced guy like Mark.

“We’re not just looking for anybody. We’re looking for someone that will bring certain attributes to the table.”

He added that the current operations team – including an executive who formerly worked with Mr Brown in Macau – were also doing an “outstanding” job.

The chairman explained: “Overall we’re pleased with where we are [with the business]. We’re still a little guy, but we’re marching ahead. We’re small but we’re agile. We adjust and we adapt to change quickly.”