Former Caesars-backed Casino Development in South Korea Unable To Survive
Posted on: September 15, 2022, 07:52h.
Last updated on: September 15, 2022, 04:31h.
Caesars Entertainment might have the chance to reclaim a South Korean casino project it once exchanged for a plate of barbecued pork. The Midan City development it once backed can’t stay afloat unless foreign money arrives to keep it afloat.
Caesars exited the project last year, well after construction began. At one point, CEO Tom Reeg said he let the company’s 50% stake go “for some barbecue pork,” as previously reported by Casino.org.
The company’s partner in the development, Guangzhou R&F Properties, grabbed the opportunity to buy the half it didn’t already own. The result has not been good, and it now admits that it has no way to continue the project without a bailout, according to local media.
Now the firm’s South Korean subsidiary, R&F Korea, has no money to move forward. It cannot cover the construction costs of $20 million that it needs to get things moving after a two-year halt because of the pandemic.
No Longer Treading Water
The project is already well behind schedule. It has received extensions from the South Korean Ministry of Culture, Sports and Tourism (MCST) because of its hardships. But the government agency has no more patience. It already issued an ultimatum that the Midan City project and Mohegan Gaming and Entertainment (MGE) needed to either find a way to move forward or risk losing their licenses.
Earlier this year, R&F received its last extension from the MCST, good for 12 months. However, it came with two conditions – the company would restart construction quickly and increase its investment by 5%.
Since then, calls for financial backing have gone unanswered. The longer it takes, the more trouble the company is in. The MCST set a hard stop for completion of March 17 of next year, which R&F can’t meet.
The project is only 25% ready. Even if it restarted today, it couldn’t meet the deadline without compromising the project’s integrity. As a result, there’s now a resort in South Korea that might be available for quick sale. Buyers can expect a foreigners-only casino, a hotel with 751 keys, a convention space, and other amenities.
MGE In a Better Spot
MGE, which missed out on a chance to have a resort in Greece in favor of South Korea, continues to advance its project. It recently said that the $1.6-billion property, Inspire Entertainment Resort, is overcoming COVID-19-induced delays to continue construction. As a result, it expects to open sometime in 2023.
The company brought the construction equipment back to life this past February once it secured $1.55 billion in new financing. It has been able to pick up the pace since then and allocate more resources to the project’s completion.
When it’s ready, the property will offer a foreigners-only casino, three hotel towers, a water park, a convention center, and more.
South Korea recently relaxed its inbound travel requirements. It doesn’t require tourists to show a negative COVID-19 test, but traffic remains slow. There’s still apprehension after the country kept its borders closed to foreign tourists for two years.
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