Maruhan buys into Macau Success

Neil Gough

Updated on Oct 19, 2007

VIP gaming hall operator Sonny Yeung Hoi-sing's Macau Success
yesterday said major Japanese pachinko parlour operator Maruhan
Corp would pay HK$796.14 million for a minority stake in the company
and its increasingly expensive Ponte 16 casino hotel project.

Maruhan becomes the first Japanese gaming firm to buy into a Macau
casino and will acquire 18.2 per cent of Macau Success and a direct 5
per cent stake in Ponte 16 which is being developed in partnership with
gaming magnate Stanley Ho Hung-sun's Sociedade de Jogos de Macau
(SJM).

The deal is the second time in the past week that a foreign investor has
bought a stake in a Macau gaming firm. Last week, British private equity
giant Permira Advisers agreed to pay HK$6.5 billion for a 20 per cent
interest in property and construction tycoon Lui Che-woo's Galaxy
Entertainment Group.

Macau Success yesterday announced that the total investment for
Ponte 16, which opens in phases from next month and includes a 404-
room Sofitel hotel, was HK$3.1 billion, a 29 per cent increase over the
previously announced building cost of HK$2.4 billion.

Management said the increase was not the result of construction cost
overruns but due to revised budgeting to include the cost of gaming
equipment, start-up capital and related expenses.

Maruhan is one of Japan's largest pachinko operators, with sales of
HK$120 billion and an operating profit of HK$2 billion in the year to
March. The Kyoto-based firm employs 9,000 people and operates 209
retail outlets across the country with a total of 118,451 pachinko and slot
machines.

Macau Success earlier this month agreed to sell 220 million new shares
or 9.1 per cent of enlarged share capital to the Japanese company at
HK$1.062 per share for a total of HK$233.64 million. Maruhan
subsequently purchased an additional 220 million existing shares or 9.2
per cent of the Macau firm on the open market for HK$1.08 per share, a
total HK$237.6 million.

In addition to buying shares in Macau Success, privately held Maruhan
will pay HK$324.9 million in cash and loans for a direct 5 per cent stake
in the Ponte 16 project. Following the deals, Ponte 16 will be 51 per
cent owned by SJM, with Macau Success' stake reduced to 44 per cent
and Maruhan's at 5 per cent. The Japanese firm's attributable interest in
the project rises to 13 per cent when its 18.2 stake in Macau Success is
factored in.

Mr Yeung's private Success Universe Group retains a 40.8 per cent
stake in Macau Success, with the remaining 41 per cent held by public
and institutional investors.

Macau Success management said the first phase of Ponte 16 would
open next month with 120 mass market gaming tables, 10 high-limit
tables and 340 slot machines in its main casino hall. More than 100 of
the 404 hotel rooms will be ready upon opening, with the rest coming on
stream by the end of the year as fitting-out work is completed.
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