By Sharen Kaur - Published in NST Property, March 9, 2022
sharen@nst.com.my
NagaCorp Ltd will continue building its third casino, Naga 3, within the NagaWorld complex in Phnom Penh, Cambodia while suspending operations in Russia following the war with Ukraine.
The Cambodian hotel and casino complex operator announced last week that it had halted construction of the Naga Vladivostok gaming and resort development complex in Russia, which was expected to cost more than RM1 billion, due to "uncertainties" about the project.
Tan Sri Dr. Chen Lip Keong, a Malaysian billionaire, who founded NagaCorp some 27 years ago, agreed in 2013 to invest a minimum of US$350 million in the Naga Vladivostok complex, which would be built on land with dual frontage and commanding views of the sea and an inland lake flanked by two hills.
In 2016, site clearing began, and an office was established in Vladivostok's city centre.
As of September 2021, NagaCorp had reportedly invested US$84 million in the Naga Vladivostok facility as part of the first stage of construction, which included a four-star hotel with 279 rooms, a casino, and a multipurpose concert hall with 2,000 seats.
In a recent update, the company said that the delayed integrated resort project was progressing, with the structure of its hotel building now complete.
NagaCorp had predicted that Naga Vladivostok would open in 2022, joining the two other casinos in the region, the Shambhala and Tigre de Cristal. All of these projects are part of the Primorye Economic Zone, a special economic zone designated for the development and operation of integrated resorts.
In a filing to the Hong Kong stock exchange on Thursday (March 3) NagaCorp stated that, in the best interests of the company and its shareholders, it is surrounded by various uncertainties regarding its gaming and resort project in Vladivostok, and that it would like to invoke the force majeure clause in the investment agreement and suspend its performance thereunder.
NagaCorp stated that it would like to halt project development indefinitely until the situation is clearer.
"The company will issue further announcement(s) when appropriate and necessary," said the Hong Kong-listed operator of Cambodia's NagaWorld.
The statement, which comes a week after Russia invaded Ukraine and the imposition of crippling sanctions on Moscow, provided no further details on Naga Vladivostok.
The war was not mentioned explicitly in the statement.
Following Russia's invasion of Ukraine, Western governments are cutting Russia's economy off from the global financial system, forcing international companies to halt sales, cut ties, and abandon investments worth tens of billions of dollars.
Chen, 73, is the founder, controlling shareholder, and chief executive officer of NagaCorp, as well as a member of the Board's Remuneration Committee, Nomination Committee, and AML Oversight Committee.
He is also a director of several NagaCorp wholly-owned subsidiaries, as well as a director of LIPKCO Group Limited, a significant shareholder in the company.
In Malaysia, Chen is the controlling shareholder of Karambunai Corp Bhd, FACB Industries Incorporated Berhad, and Petaling Tin Berhad.
He was ranked No. 9 on Forbes' list of Malaysia's 50 Richest last year, with a net worth of US$3.4 billion.
NagaCorp obtained a casino license in Phnom Penh, Cambodia, allowing it to operate there until 2065 and granting it a monopoly in the country until 2035.
It operates two casinos, Naga 1 and Naga 2 (which opened in November 2017), within the NagaWorld complex in Phnom Penh.
Naga 3, which is designed to withstand Richter 6 earthquakes, is currently under construction and will cost US$3.5 billion. It will more than double NagaCorp's capacity and is expected to be completed in 2025.
According to reports, the combined NagaWorld complex of Naga 1, Naga 2, and Naga 3 will have about 5,000 hotel rooms, 1,300 gaming tables, 4,500 electronic gaming machines, and numerous other non-gaming attractions. It is expected to be one of the world's largest integrated entertainment complexes.
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