Macau Legend Development Ltd, a prominent player in the global casino and hospitality sector, is gearing up to dispute the termination of its concession for a major casino resort project in Praia, announced by the Cabo Verde government. The Hong Kong-listed company is actively seeking legal counsel in Cape Verde, aiming to vigorously defend the rights and interests of its stakeholders.
Detailed account of the concession termination:
The government of Cape Verde, in a recent publication in the nation’s Official Bulletin, declared the cessation of the Establishment Convention and its Addendum with Macau Legend’s subsidiaries, MLD Cabo Verde Resorts SA and MLD Cabo Verde Entretenimento SA. This drastic step was taken after allegations surfaced that Macau Legend had severely and repeatedly failed to fulfill its developmental and financial obligations tied to the project.
Specifically, the termination was triggered by purported violations of the agreement, including the unauthorized transfer of more than 20% of its share capital to Levo Chan, former CEO of Tak Chun Group, in 2020—a move not sanctioned by the Cape Verdean authorities. Further complicating matters, Chan’s subsequent legal troubles, including a conviction for illegal gambling activities and money laundering, cast a shadow over the project.
The Cape Verdean government has refuted Macau Legend’s assertion that the COVID-19 pandemic hindered the project’s progress. Authorities emphasized that despite the pandemic concluding in 2021, the promised construction work has not resumed, and no new timelines have been established for the project’s continuation. In response, the government plans to reclaim all lands and assets associated with the project, effectively pulling the plug on the €250 million initiative.
On the other side, Macau Legend maintains that the pandemic played a critical role in the project’s stalling and argues that the government’s decision to terminate the concession is unfounded. The company has expressed its determination to contest these allegations robustly to protect its investments and shareholder interests.
Financial implications and ongoing operations:
According to Inside Asian Gaming, Macau Legend stated: “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. 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 financial ramifications for Macau Legend are significant, as the assets related to the Cape Verde project were valued at approximately HK$47 million as of June 30, 2024. The company is set to conduct an impairment assessment to address potential financial impacts. Despite these challenges, Macau Legend continues to operate its key assets in Macau, including the Macau Fisherman’s Wharf and the Legend Palace Casino, in partnership with SJM Resorts S.A.
The termination in Cape Verde adds to the uncertainty surrounding Macau Legend’s future operations, especially as it reported a substantial net loss of HK$109.9 million (US$14.1 million) during the first half of 2024. Nevertheless, the company reported a 16.5% increase in revenue, indicating some areas of business resilience.
Macau Legend has committed to transparently communicating with its shareholders and the investment community as it navigates through the legal challenges in Cape Verde. The outcome of this legal battle will likely have far-reaching implications for the company’s strategic direction and operational stability.
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