Lippo Group Trying to Sell Stake in Its South Korean Joint Venture with Caesars Entertainment
Lippo Group, an Indonesian conglomerate which has a partnership with Caesars Entertainment for a South Korean casino, is having trouble convincing its partners to make the necessary lands deals for the project to begin.
In January 2013, Lippo Group joined with Caesars and a third party, LOCZ Korea, to develop a $2 billion integrated resort in the Incheon area. In 2014, South Korean officials approved the project.
“No Centainty” in South Korean Casino
In the two-plus years since approval, little work has been done to move the project forward. In December 2015, Lippo Group announced it had “no certainty” that the project would continue.
In March 2016, Lippo announced it was trying to sell its stake in the project. At the time, the Indonesian company said it was frustrated in trying to convince its partners to begin work on the project. In particular, Lippo could not convince Caesars and the mysterious LOCZ Korea to build land for the project.
Lippo Cannot Sell Stake in Joint Venture
Now, it appears Lippo has faced difficulties selling its stake in the joint venture. It filed papers saying it planned to have its stake sold by November, but the exit negotiations have stalled since then.
A statement filed by Lippo stated that the snag in negotiations appears to be between Caesars Entertainment and LOCZ Korea. The statement read their own deal “is dependent upon a separate set of negotiations between Caesars Korea and [the third party].”
CEOC Bankruptcy Lawsuit
The speculation by industry sources is Caesars Entertainment’s lingering bankruptcy concerns have caused negotiations to stall. Caesars Entertainment is involved in a 2-year old lawsuit over its reorganization plan for its operations division, Caesars Entertainment Operations Company (CEOC). Caesars creditors are suing over the plan, which involves a $18 billion banktupcy.
Given Caesars’ focus on its massive debt situation, it does not appear interested in moving ahead with the South Korean project. This has caused negotiations with LOCZ Korea to stall, and contributed to Lippo Group’s concerns about the South Korean casino altogether. Lippo Group apparently is trying to sell its share to LOCZ Korea, but it stated that the deal “may or may not materialize“.
December 6 Update
In a later update, Caesars Entertainment reached a deal with Guangzhou R&F out of China to move forward with their integrated resort in South Korea. It appears as if Lippo Group’s equity is being bought by Guangzhou R&F, which should be a great relief to Lippo executives.
R&F is one of the largest housing developers in China. It has massive resources to partner with Caesars know-how in building integrated resorts. The two companies plan to share ownership 50% to 50%. Benchmarks for investments and construction were announced along with the joint venture.
The wording of the joint venture’s mission statement also suggested that Guangzhou R&F has contingencies to insure the South Korean project will not be materially affected by Caesars’ ongoing bankruptcy case.
North Korean Anti-Gambling Stance
While South Korea slowly moves towards a more open attitude towards land-based casino gambling, North Korea appears to be headed in the opposite direction (which is no surprise). South Korea at present allows casinos only on outlying islands, far away from population centers. South Korean citizens have only limited access to gambling, as the island casinos are meant for foreign visitors from China and Japan.
Still, it is light years ahead of its neighbor in promoting gambling. A recent directive from NK News, an official news agency of the North Korean government, told residents they must report on neighbors when they see activities which “evoke social problems“.
One of those activities was gambling.
Superstition and Trickery Are Crimes
In the missive, NK News stated the government called for citizens to report any occurrences of “superstition, gambling, and prostitution“.
Other activities people should report are “exotic and decadent videos” and “trickery” of any sort.
This is fairly standard for the North Korean government and might be laughable, except for the harsh punishments for anyone accused in North Korea. Prison camps exist in which whole generations of families are imprisoned. Children are born in prison and are expected to remain there their whole lives, as well as the lives of their children. Thus, another directive calling for the kind of Gestapo-like reporting of neighbors is more tragic than comical.