SJM Holdings has agreed a deal with Angela Leong On Kei, the mother of Stanley Ho’s youngest children, to rent space within Casino Jai Alai Palace on the Macau peninsula.
SJM had previously described Casino Jai Alai as a ‘self-promoted’ casino operating ‘under the same license’ as Casino Oceanus. However this latest deal calls into question whether Casino Oceanus and Casino Jai Alai have operated as one cost centre, or whether it should be classed as a satellite casino spun off from the gaming licence of SJM’s concession-holding unit Sociedade de Jogos de Macau SA. If it was satellite casino, SJM would have to share the economic benefits with third party owners. Ms Leong is believed to own 97.3 per cent of Jai Alai Palace.
Investors had previously thought the Jai Alai property to be a wholly-owned core property of SJM. SJM is now describing Casino Jai Alai, which is currently closed for major refurbishments, as a hybrid between a core SJM property and a satellite one. Therefore SJM and its shareholders will have to share economic benefits with Ms Leong. Rent for the year will not surpass US$23.2m for each of the three years until December 31, 2016.
Those close to the dal claim it is part of Staley Ho’s blueprint to ensure that Ms Leong has financial security in the future.
Ambrose So Shui Fai, Chief Executive of SJM Holdings, described the deal as ‘connected transaction.’
“Angela Leong is an executive director of SJM Holdings, so when we sign an agreement to lease the properties from her we need to announce it. Oceanus is not as big on its own but if we integrate it with Jai Alai to form an integrated part of the whole property it will be able to attract more critical mass to the property which will enhance the business of SJM.”
The two venues operate a combined total of 188 mass market gaming tables, one VIP gaming table and 648 slots.