Lawrence Ho said he is selling off his entire stake in Summit Ascent Holdings, shortly after the Russian government announced changes that could potentially double taxes for the company’s Tigre de Cristal resort near Vladivostok.
Ho, who is chairman of Summit Ascent, holds 1.34 percent directly and a further 16.03 percent through his wholly owned Quick Glitter company. The shares are being placed with a minimum price set at $1.05 a share.
Ho began paring down his holdings in September, cutting his stake from 27 percent to 17 percent.
Apart from the potential tax hike, which comes into effect next year, the government in Russia has also said that taxes are likely to increase by a further ten times by 2020. The resort in the Primorye gambling zone has also been held back by rampant illegal gambling in the area, which has affected its ability to attract the local mass market.
As a result, Union Gaming notes that the chance of the Phase 2 portion of the project moving ahead, or for other planned resorts to be developed “becomes diminished by the day.”
“We largely expect a status quo situation where the company’s Phase 1 project, Tigre de Cristal, remains the only legal gaming facility in the Russian Far East for the foreseeable future,” the firm said in a research note.
“With Phase 2 less likely, and with the benefits of concentration of other new supply now most likely several years away at best, we believe it is only fair to value shares based solely on the Phase 1 opportunity. As such, we are maintaining our Hold rating and maintaining our HK$1.00 PT, which only considers the value from Phase 1.”
Hong Kong-listed Nagacorp has begun work on its resort in Primorye and recently said it is likely to open in mid 2019, while Russia’s Diamond Fortune Holdings is still preparing the ground for its Selena Resort.