Hong Kong-listed Macau Legend Development Limited says it will seek legal advice with the intention of contesting a decision by the government of Cape Verde to terminate its concession to develop and operate a casino resort in the capital city of Pria.
Cape Verde authorities announced in the nation’s Official Bulletin last week that it was cancelling the Establishment Convention and its Addendum entered into with Macau Legend subsidiaries MLD Cabo Verde Resorts SA and MLD Cabo Verde Entretenimento SA due to the company allegedly “flagrantly and repeatedly” violating its obligations.
“The State of Cape Verde has no choice but to proceed with the termination of the contracts,” the Council of Ministers said of the €250 million project.
“The State of Cape Verde gave MLD companies every opportunity to resume construction works, negotiate the sale of shares, or transfer their contractual position to a potential interested party to continue the project.”
The Macau Legend subsidiaries violated their contractual obligations on “several levels”, the government said, including by “transferring more than 20% of its share capital without authorization from the Cape Verdean government” – a reference to the 2020 sale of a 20.65% stake in the company to Levo Chan, the CEO of one Macau’s largest junkets at that time, Tak Chun Group. Chan has since been arrested and jailed for 14 years – later reduced to 13 years on appeal – for illegal gambling, fraud and money laundering.
The Cape Verde government also rejected claims by Macau Legend that its failure to progress with the casino project was related to the COVID-19 pandemic.
“This justification cannot be accepted as the COVID-19 pandemic ended in 2021 and to this day, construction remains halted with no scheduled date for resumption,” the resolution stated. The land and all assets, both previously existing and constructed, would revert back to the government, it added.
In a Friday filing, Macau Legend said it had been informed by the Cape Verde government on 19 November regarding their decision to terminate the concession related to the construction and operation of the hotel casino and hotel residential infrastructure because it had not met the deadlines set for the project.
“As a result, the Cape Verde Government is allegedly entitled to exercise the right to terminate the Convention and the Concessions, and to assume control of all assets previously assigned to the subsidiaries, as well as the assets already constructed by the subsidiaries, under the Investment Project,” Macau Legend said.
“The Company is currently actively seeking legal advice in Cape Verde on the appropriate course of action and intends to vigorously contest these allegations to safeguard the interest of the Company and its shareholders.”
The company added that the carrying value of the assets as of 30 June 2024 was approximately HK$47 million, with management set to perform an assessment regarding the provisions for impairment on the assets accordingly.
For its part, the Cape Verde government stated last week that it had given Macau Legend “every opportunity to resume work or to negotiate the sale of shares or [to forward] the assignment of their contractual position to a potential interested [party] in continuing the project.”
Macau Legend’s Cape Verde project was first agreed by former Macau Legend chairman David Chow in 2015 with a ground-breaking ceremony held in 2016. It had been slated to include a casino, hotels, MICE facilities and a marina on a site covering almost 153,000 square meters although little work has been completed since the start of the pandemic.
Macau Legend, which owns the Macau Fisherman’s Wharf precinct on the Macau peninsula in which it operates a number of hotels as well as the casino at Legend Palace on behalf of SJM Resorts S.A., continues to face financial woe and in late August outlined material uncertainties relating to its ability to continue as a going concern. The company reported a HK$109.9 million (US$14.1 million) net loss for the six months to 30 June 2024.
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