A legal morass in Viet Nam that has caused delays in the licensing of casinos and setbacks in bank financing for projects has caused a major financial problem for Las Vegas-based Pinnacle Entertainment Inc. (PNK).
The company spent nearly $100 million to acquire a 26 percent stake in Asian Coast Development Ltd. of Canada, a firm that had filed for a license to build a large-scale resort in Ho Tram, about two hours drive from Ho Chi Minh City.
Regulatory demands regarding the developers’ investment certificate, however, has caused the company to scrap the scheduled opening date that was to be within this first fiscal quarter.
The delay also caused MGM Resorts International (MGM) to withdraw from an agreement to manage the hotel-casino. It was announced on Friday that since the project had failed to meet certain pre-opening milestones before March 1, MGM was cancelling its commitment.
Asian Coast Development said last week that it was awaiting final regulatory approval of amendments to its investment certificate, which is required to operate the casinos. A new opening date will now await discussions with alternate partners to replace MGM as the operator.
“We thank MGM for its assistance in the hiring and training of our 2,000-strong team of Vietnamese hospitality professionals,” said an ACDL spokesman.
The Ho Tram project involves 541 hotel rooms and a casino floor with 500 slot machines and 90 table games.
In a filing last year, Pinnacle Entertainment took a $25 million charge against its Viet Nam investment because of the project’s delays. The company also said, according to Reuters, that it “could lose its investment” because of problems with gaming licenses and funding by local banks.
Also last week, Pinnacle announced it was selling the land in Atlantic City where it had planned to build a $2 billion casino resort prior to the recent recession.
The property, purchased for $270 million in 2006 from Sands Casino Hotel, is being sold for $30.6 million.
Ray Poirier is the longtime executive editor at GamingToday.
Contact Ray at [email protected].