SJM Holdings has secured shareholder approval to proceed with the acquisition of L’Arc Hotel in Macau, obtaining clearance for the transaction just two weeks before year-end, as the city approaches the deadline for phasing out the satellite casino model.
The approval was granted at an extraordinary general meeting held on December 15th, according to a filing to the Hong Kong Stock Exchange on Monday.
Independent shareholders voted overwhelmingly in favor of the proposed transaction, approving both the acquisition agreement and a related loan arrangement. The resolution was passed by poll, with more than 99.9 percent of votes cast in support, allowing SJM to proceed with the transaction within the timeframe set by regulators.
Under the approved terms, SJM will acquire 100 percent of Arc of Triumph Development Company Limited, the corporate entity that owns L’Arc Hotel and its associated casino and facilities in Macau. The total consideration for the acquisition is HK$1.75 billion ($224 million), a price consistent with an independent valuation of the property’s market value.
The consideration includes repayment of a substantial portion of the target company’s existing bank debt. As of the signing date, Arc of Triumph Development Company Limited carried approximately HK$1.93 billion ($247 million) in bank borrowings. SJM will arrange repayment of up to nearly HK$1.75 billion ($224 million), while a nominal amount of MOP180,000 ($22,000) will be paid for the transfer of 100 percent of the company’s shares.
The remaining shortfall of about HK$177.5 million ($22.7 million) will be borne by the vendors and financed through a separate three-year loan provided by SJM Resorts to the vendor’s beneficial owner. The loan will bear interest at the group’s prevailing credit facility rate and will be secured by a share charge over SJM Holdings shares owned by the vendor’s controlling party.
The shareholder approval comes as SJM adjusts its Macau peninsula strategy. In late November, the group confirmed it would not proceed with its planned acquisition of the property housing Casino Ponte 16, and the casino permanently closed on November 28th.
Against the backdrop of the satellite casino model’s impending deadline, SJM has indicated that L’Arc Hotel is intended to be converted into a fully self-operated gaming property, strengthening its direct operational presence in Macau.
