A casino project in Cabo Verde meant to add new life to the archipelago may not happen. Macau Legend Development, the company behind the failed Tak Chun Group junket, is apparently no longer in a position to cover the costs of the project.
A bridge connects Santa Maria Islet with the mainland in Cabo Verde. Macau Legend Development’s plans to build a casino on the islet have not moved forward in six years and may have to be scrapped. (Image: Macau Business Media)
David Chow, the founder of Macau Legend, came into Cabo Verde over two decades ago with plans to help the Atlantic Ocean island nation attract tourism. In 2001, he presented Djeu, a massive complex on Santiago Island that would include a casino, a marina and commercial space.
That was when Macau Legend, the company behind Macau’s Fisherman’s Wharf and other properties, was enjoying great success. It was also before its junket operations came crashing down with the arrest of Tak Chun’s former boss, Levo Chan, on illegal gambling charges.
Cabo Verde Seeing Red
Despite having presented Djeu in 2001, it didn’t get off the ground until 2016. Six years later, the only indication that any construction activity took place there are an offiae and a bridge connecting a small islet, Santa Maria, to the mainland.
Chow’s project was to be one of the most expensive in Cabo Verde, which lies about 500 miles west of Senegal, Africa. It initially carried a price tag of around $238.85 million, which later became $84 million. In return, Chow would receive a gaming license valid for 25 years, 15 of which were to be exclusive.
He then threw in another $1 million in order to retain the exclusive rights to consider iGaming and online sports betting. Just like Djeu, they never materialized.
As Macau Legend faces issues and a criminal investigation, Chow has sought to distance himself from the company. However, even as he cuts his stake, he is still inextricably linked to it.
A recent report by media outlet Hoje Macau states that Macau Legend missed payments on two bank loans. As of the end of June, it had outstanding loans of $2.3 billion and still has to pay $237 million over the next 12 months. However, according to the media outlet, the company only has around $8.4 million available.
Because of its financial situation, Macau Legend is trying to renegotiate the terms of its loans. However, the request came after the due date, which could prove disastrous. If the company doesn’t have the financial stability to cover even the minimum amount of its debts, creditors might decide that it’s time to start seizing assets.
Macau Legend’s Unstable Grounds
In the first half of this year, Macau Legend spent $6.25 million on different financial vehicles and interest. This is $2.48 million more than it spent in the same period last year.
However, the company recorded losses of around $61.85 million in the first half of the year. This, it stated, is an improvement over the same period last year. Then, the losses were $87.72 million.
Shareholders have been bailing out the company, as well. They have provided around $25.48 million this year to keep Macau Legend moving forward. As it tries to get things under control, the company wants to sell some of its debt securities in exchange for about the same amount of cash.
This past July, Macau Legend bosses exclaimed that there were “no major risks” to the company’s future. The evidence points to the contrary, as do the findings of Ernst & Young. The accounting firm has questioned the company’s ability to survive.
That doesn’t bode well for the future of Santiago and Cabo Verde. On the other hand, though, perhaps a more solid operator could move in and negotiate a deal with the local government.
The groundwork is already in place and the country’s economy is growing. This might make it a viable alternative for a reputable gaming company.
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