Blue Whale’s acquisition of Aquis hits a snag
A deal that would see Blue Whale Entertainment Proprietary Limited acquire an 86.99 per cent stake in the casino operating arm of Aquis Entertainment Limited is reportedly in danger of being terminated due to regulator lethargy.
World Casino Directory reports that according to a report from Inside Asian Gaming, the pair inked the $22 million proposition in December 2018 and had hoped to have fully completed the transaction soon after it was unanimously sanctioned by Aquis Entertainment’s shareholders in March.
This transaction is still reportedly awaiting the endorsement of the ACT Gambling and Racing Commission and as a result has not yet received any of the required regulatory approvals.
Aquis was purchased by Hong Kong-based businessman Tong Fung Wing-Cheung for approximately $4.1 million in late-2014 and is responsible through its Aquis Canberra Holdings subordinate for the Casino Canberra property.
The Sydney-listed firm subsequently detailed that it was hoping to launch a $226 million redevelopment plan that was to have seen its sole casino in Australia add hotels, shops and restaurants, as well as upto 200 slots and 60 fully-automated gaming tables.
Inside Asian Gaming reported that the original agreement between Aquis and Blue Whale includes a provision that allows either party to pull out on ten days’ notice, should all regulatory approvals not be received in advance of a December 22, 2019 deadline.
As this date has now passed, the former firm purportedly used an official filing to proclaim that it was working to secure “an extension to such termination date” so as to give the ACT Gambling and Racing Commission ‘sufficient time’ to finish its review and issue the appropriate regulatory approvals.
Casino Canberra losses pile up
The losses for Casino Canberra have been piling up.
Casino Aus reports that with the reporting of the first half of 2019, the casino lost another $2.5 million.
Losses have been increasing from one year to the next for the past several years.
Could a government development save the day though?
The casino first opened in 1994, located in the central business district of Australia’s capital city.
The casino did well for many years. It now has 39 gaming tables for table games like blackjack, roulette, as well as a poker room and sports lounge affiliated with TAB.
There are regulators and a stream of customers that prefer that type of gambling.
But Casino Canberra hasn’t been able to keep up with the times for several reasons.
First and most importantly, it is not licensed to operate pokies.
The lack of that gambling option for casino customers has proven to be a detriment.
Second, it is not operated in conjunction with a hotel or concert venue, things that help more modern casinos attract customers.
Casinos Australia International was the original operator of the casino.
It was acquired by the Aquis Group, owned by Hong Kong billionaire Tony Fung in 2014.
Last year, Blue Whale Entertainment acquired the casino for $32 million.
And that made Blue Whale a majority shareholder in Aquis Entertainment.
More than $2.5m lost
According to the financials for the first six months of 2019 – the period ending June 30 – Casino Canberra reported a loss of $2,553,772.
That loss was up from the same period in 2018, at which point the company reported a loss of $2,156,212.
The year-on-year losses increased by 18.4 per cent.
Revenue was down as well.
Casino Canberra reported $11,985,114 in revenue, down 2.7 per cent from $12,317,421 in the same period last year.
EBITDA was down 176.2 per cent, earnings before interest and tax were down 34.7 per cent and operating costs had increased, though not significantly.
One obvious improvement that would help increase business at Casino Canberra would be the addition of poker machines.
However, the government has refused numerous times to remove the restrictions originally implemented when the casino was built.
Other establishments in Canberra that do have pokie licences have lobbied for years against the casino obtaining them, and they have been successful.
In 2016, Aquis submitted a proposal to the government to redevelop Casino Canberra in exchange for a licence to operate 500 pokies.
Chief Minister Andrew Barr agreed in principal to 200 machines.
However, the redevelopment had to be completed first and the pokies had to be purchased from establishments that currently own them so as not to exceed the machine cap for the region.
Aquis then submitted its final proposal for the $330 million renovation, but negotiations took over and then disintegrated.
The government and property could not agree on much of anything, from the final number of pokies to the details of the redevelopment, such as the amount of land to be awarded to Aquis for the necessary expansion.