Angela Leong takes full control of L’Arc Macau

By Mia Chapman Updated
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The co-chair and executive director of SJM Holdings Angela Leong On Kei has fully acquired Macau hotel and casino L’Arc Macau.

Inside Asian Gaming reports that according to a filing by SJM, Leong informed the company that as of 17 May 2021, she had become the sole owner of L’Arc holding companies City Honour Developments Limited and Power Link Fortune Limited, which indirectly own L’Arc Macau operating entity L’Arc Entertainment.

No details of the size or nature of such transactions was provided, although SJM noted that Leong’s full ownership “represents a significant change from the earlier position where she was one of a number of investors in the indirect holdings companies.”

Nevertheless, the company said a series of agreements between its subsidiary, Sociedade de Jogos de Macau, SJMSA, L’Arc Entertainment and VIP gaming promoter Suncity Group would remain in place.

Those agreements include an original 2009 agreement, since extended through to June 2022, under which L’Arc provides support services to SJMSA in relation to marketing, promotion, customer development and introduction, as well as authorising SJMSA to occupy and use a designated area of L’Arc to operate a casino under a third-party “satellite” arrangement.

A so-called “tripartite agreement” between SJMSA, L’Arc and Uncity relates to payments owed between the parties for VIP operations.

While those agreements are now connected transactions due to Leong’s ownership, SJM said it considers them to be “in line with the group’s business of operating various satellite casinos, which is in the ordinary and usual course of the business of the group.”

Leong has a close connection with L’Arc Macau, having been a 50/50 investor alongside Hong Kong real estate tycoon Cheng Yu-tung when the building first opened in 2009.

Premium mass gamblers key to Macau recovery

In April, rival casino operator Melco Resorts and Entertainment delivered a gaming update.

A note from brokerage Sanford C Bernstein mentioned Macau’s April casino gross gaming revenue had been “steady”, even as visitor volume had risen, indicating that the recovery of the Macau tourism sector had involved a “low value customer” segment, in gaming terms.

David Sisk suggested however that his firm’s market share of so-called premium mass gamblers, those playing in cash at high multiples rather than via rolling chips through junkets, had “grown a little bit, if anything”.

He added: “I don’t think we’ve lost any share,” in premium mass.

Some of the premium mass people were prior VIP players that had “switched over from the junkets”, he suggested.

Melco Resorts’ chief financial officer, Geoff Davis, confirmed to analysts that while first quarter daily operating expenses in the Macau market, where the firm runs City of Dreams, Studio City and Altira Macau, were US$1.9 million, that had now rise to about US$2.1 million, as a function of returning business.

He also confirmed the group had for the first quarter provision for bad debt amounting to US$17 million, compared to US$23 million in the fourth quarter.

Melco Resorts’ chairman and chief executive Lawrence Ho told the call that Melco’s view from 10 years ago was that the VIP market wasn’t really sustainable.

“I think even within the VIP business, the junket part of it is not going to be what it was in 2019 and I think more of that might shift to the premium direct side of things,” Mr Ho said.

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