Listed companies exit to cut their losses on casino cruise ship - Tuesday 25th of October 2005

Two listed companies that invested a combined HK$111 million into junket operations on the Omar III cruise liner have unwound their stakes.

The two companies, Guo Xin Group and Century Legend (Holdings) announced late last month that the Omar III had been sold and its casino closed. Operator Asia Cruises declines to comment about the ships fate, but the Hong Kong Marine Departments Web site said the ship was scheduled to return to Hong Kong from the Guangdong port of Huangpu Friday.

Guo Xin previously warned shareholders it might not recover any of the HK$96 million it paid to businessman Benny Ki for a 60 percent stake in a contractor involved in marketing junkets on the ship. But a Friday stock exchange filing said Ki had agreed to pay HK$52.5 million back to Guo Xin and cancel the remaining HK$22.5 million balance of a convertible note the company issued him in the original deal. Guo Xin said it collected HK$28 million as its share of the contractors profit between the original deals completion on March 1 and the casinos closure on September 28. The contractor collected a 1.45 percent commission on VIP gambling chip purchases and exchanges, a management fee equal to 0.2 percent of the casinos total chip turnover and 40 per cent of the casinos gross profit after expenses.

Guo Xin announced Friday that its loss in the year that ended on June 30 widened to HK$67.1 million from HK$7.2 million a year ago. Revenues shrunk to HK$122.1 million from HK$161 million.

Century Legend last year paid Fu Cheng-wai HK$15 million for an effective 2.7 percent stake in a junket agency operating on the ship. The company initially told shareholders that the junket operation would resume on another cruise ship, but late last week, Century Legend announced that it had sold back its stake to Fu for HK$13.6 million. Executive director Evans Chu said Century Legend had collected HK$1.4 million in dividends during the year of operations since the investment. "In overall terms, the group made no profit or loss from the disposal," Chu said. "In the circumstances, the board considers it in the interest of the company to be able to immediately exit from the investment at cost and look for other alternative investments."

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