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|June 22nd, 2009, 05:47 PM||#11|
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Mandarin group sells Macau site to Ho flagship
21 January 2009
South China Morning Post
The Mandarin Oriental hotel in Macau is to be sold for HK$1.6 billion to gaming-to-property company Sociedade de Turismo e Diversoes de Macau (STDM), paving the way for a possible redevelopment of the prime site in the city.
Mandarin Oriental International and property developer Shun Tak Holdings said yesterday that they had agreed to sell their respective 50 per cent interests in the 416-room hotel to STDM, which is owned by Stanley Ho Hung-sun and his family.
As a key part of the deal, the sellers have the right to share any increase in the hotel site's value above the sale price if the property is redeveloped or sold to a third party in the future.
Analysts said the site, a two-minute drive from the ferry pier and in the heart of the central business district next to the Sands Macao casino, had high redevelopment potential.
The deal will end Mandarin Oriental International's partial ownership of the 25-year-old hotel. A transition agreement will allow it to operate the hotel for up to two years from completion of the deal, scheduled for May 31.
STDM will rebrand the hotel.
A spokesman for the Mandarin Oriental group denied the hotelier was exiting Macau, which is challenged with slumping tourist arrivals, rising unemployment and Beijing's policy of discouraging mainlanders from gambling.
"STDM's offer is attractive," she said.
The hotel group will manage a 213-room Mandarin Oriental hotel on the waterfront due to open next year.
Based on the sale price, the Mandarin Oriental group will receive proceeds of US$90 million, which will be used to replenish working capital.
The group will realise a post-tax gain of US$75 million this year as the carrying value of the stake in the hotel stood at US$15.7 million as of December 31, 2007. The contribution to earnings before interest, taxation, depreciation and amortisation was US$10.2 million.
Some analysts said the identity of the buyer was unexpected. One of Asia's largest junket operators, Jack Lam Yin-lok of Jimei Group, had been rumoured to be a frontrunner for the hotel.
Executives of SJM, the gaming arm of STDM, said recently that the company was in talks to mandate Mr Lam to operate Casino Oriental, a remodelled SJM casino adjoined to the Mandarin Oriental hotel.