Success Dragon terminates one Vietnam slot club deal

Hong Kong-listed gaming services firm, Success Dragon International Holdings Ltd said it has terminated one of its two deals with two slot clubs in Vietnam for the provision of electronic gaming machine management, following both of the clubs having ‘encountered difficulties’ in obtaining business certificates from the authorities.
In December 2015, the company announced that it had reached deals with the two slot clubs – respectively located in the Le Meridien Hotel in Ho Chi Minh City and One Opera Hotel in Danang – for providing investment, management and operations of the electronic gaming machines for the clubs.
‘Both Le Meridien and Opera have encountered unexpected difficulties in obtaining the requisite business certificates for operation of electronic gaming machine business,’ the locally-based company said in yesterday’s filing.
The company added that Vietnam’s recent changes to regulations relating to electronic gaming machines might also affect the enforcement of its agreements with the two operators.
This refers to the new regulation announced on December 30, 2016, which mandates that slot machines must offer a pay-out rate of no less than 90 per cent, while any new pay-out rate must be added to the software of the machines while they are still in the factory.

Deal terminated
The company said, ‘after due and careful consideration,’ it has terminated its deal with the Opera slot club, as the operator had failed to obtain the certificate prior to the extension of time granted by the company.
Meanwhile, it added that it is in the process of discussing and negotiating with the Le Meridien slot club for a new co-operation approach.
‘The Board considers that the termination has no material adverse impact on the business operation and financial position of the Group,’ the company claimed, adding that further announcements would be made if there is any further material development of the deals.
The company’s original deal with the Opera slot club stipulated that it was entitled to a monthly management fee equivalent to 4 per cent of the total gross revenue brought by the operation of One Opera Hotel, after deducting all prizes paid to the players of prize-winning games, and taxes.
Since the gaming slump began affecting Macau, the company has started setting its sights on Vietnam.
Apart from the two provisional deals, in May last year, the company announced it had reached an agreement with Sports and Entertainment Services Joint Stock Company to provide outsourced management services for the greyhound racing business in the Southeast Asian country.
At one stage it was also considering buying a 45 per cent interest in One Opera Hotel, but the deal was cancelled last June due to the fact that the vendor, Ngoc Nguyen, had ‘difficulty in obtaining the requisite consent for the implementation of the reorganisation,’ according to the then-announcement.
For the first six months of its fiscal year ended September 30, 2016, the company posted a net loss attributable to shareholders of the company of some HK$30.5 million (US$3.8 million), narrowing by 78.3 per cent year-on-year.