Asia Entertainment & Resources Ltd. Announces Non-Binding Memorandum Of Understanding To Acquire Bao Li Gaming Promotion Limited
Asia Entertainment & Resources Ltd. (“AERL” or the “Company”) (NASDAQ: AERL), which operates through its subsidiaries and related promoter companies as a VIP room gaming promoter, today announced that that it has entered into a non-binding memorandum of understanding, whereby it will acquire Bao Li Gaming Promotion Limited (“BLGP”), a Macau-based VIP room gaming promoter that currently operates one room with five tables at City of Dreams Macau, a Melco Crown property. Subject to due diligence and customary closing conditions, Asia Entertainment expects to close the transaction by September 30, 2012.
The total upfront consideration for BLGP is expected to be approximately US$15 million for 100% of BLGP’s operations. Additionally, if BLGP’s Rolling Chip Turnover is at least US$2.5 billion in each of the three years ending December 31, 2013, 2014 and 2015, its shareholders would receive three additional purchase consideration installments of US$13 million and 625,000 ordinary shares of AERL. BLGP’s stockholders can receive additional incentives for exceeding these targets. Until December 31, 2015, BLGP’s promoter, Kan Kuong Lou, would provide a personal guarantee for any bad loans associated with BLGP’s operations prior to the closing of the acquisition.
The City of Dreams Casino offers both the fixed commission and the revenue sharing remuneration model, and this VIP room will operate under the revenue sharing model. From this transaction, AERL will be able to expand its existing agents network. Upon the closing of the acquisition, AERL will have 34 tables in four VIP rooms.
“We are pleased to have the opportunity to add BLGP to the Asia Entertainment family,” said AERL Chairman Lam. “In addition to our current presence at the Galaxy and Las Vegas Sands casinos, this acquisition will allow us to expand our presence with another license holder (Melco Crown) in the Macau VIP gaming market, and with five more tables, further mitigate volatility from the revenue sharing model which becomes effective for all our VIP rooms on September 1, and ultimately provide our shareholders with long-term value.”
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