Capital resources at billion-dollar casino project of KN Cam Ranh

The capital resources at the billion-dollar casino project of KN Cam Ranh

Regarding the charter capital, according to the project contents in Decision No.2539/QD-UBND of the Khanh Hoa People's Committee, KN Cam Ranh has a charter capital of VND790 billion ($34.35 million, according to the first modified business registration certificate on January 26, 2016). Since then, the company has increased its charter capital five times to VND7 trillion ($304.35 million, according to the 5th change in January 2018).

Long Thanh Golf Investment and Trading JSC contributed VND6.3 trillion ($273.9 million – 90 per cent) and Le Van Kiem contributed VND700 billion ($30.43 million – 10 per cent).

According to the Ministry of Planning and Investment's evaluation of KN Cam Ranh Co., Ltd.'s financial capacity prior to land allocation, the company has registered to increase capital contribution by other parties from VND780 billion ($33.91 million) of the VND6.95 trillion ($302.39 million) to ensure that capital contribution stays at around 15 per cent in the project.

After receiving comments from the Ministry of Finance and the Ministry of Planning and Investment, KN Cam Ranh has submitted a report to prove its ability to mobilise capital. Accordingly, in a document of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Dong Sai Gon branch agrees in principle to provide funding for the project (Document No.1246/TB-CNĐSG-KHDN dated October 24, 2016).

More funding was sourced from customers who have bought apartments in the project, complying with the provisions of the Law on Housing and the Law on Real Estate Business.

Capital is also mobilised from construction contractors. According to KN Cam Ranh, some contractors want to use a part of their payments to invest in products such as villas and apartments in the project.

In addition, on June 16, 2017, the company also signed an agreement with the US-based Global Gaming Asset Management (GGAM). According to KN Cam Ranh, GGAM will be responsible for managing and operating the casino and will contribute 20-30 per cent of the total project investment. The two parties will agree on specific investment co-operation after the project is authorised by the local governments to add a casino facility.

On October 26, 2018, Orient Commercial Bank's (OCB), Binh Duong Branch issued Document No.47/CK/OCB-DB to KN Cam Ranh, promising that: "In case the foreign partner managing the casino and KN Cam Ranh cannot sign an investment co-operation contract after the casino element is greenlit, we agree in principle to provide VND9.275 trillion ($403.26 million) in funding, equivalent to 20 per cent of the total investment capital of the project."

Thus, most of the "huge" capital of the KN Paradise complex will come from bank loans, co-operation from foreign partners investing and managing casino operation, and other mobilised sources, accounting for 85 per cent. The remaining 15 per cent, equivalent to VND 6.95 trillion ($302.39 million) is capital of KN Cam Ranh.

Previously, the MPI has submitted to the prime minister the appraisal report about the casino project, which is one of the added facilities to KN Paradise Cam Ranh Complex. The Khanh Hoa People’s Committee approved in principle the complex's investment plan. At present, the investor proposed adjusting the location of the office building and wants to rename it while adding a 27-hole golf course and a casino. Besides, the investor wants to increase investment capital and adjust the construction schedule of the project. Notably, the total investment capital was proposed to be increased to $2.06 billion.

The MPI also proposed the prime minister to grant the investment registration certificate to the investor, although the project is developed by a domestic investor and so should not need an investment registration certificate.

On January 16, 2017, the prime minister signed Decree No.03/2017/ND-CP, which took effect on March 15, 2017, allowing locals to enter and play in casinos on a three-year trial basis.

Accordingly, an integrated resort and casino complex with Vingroup holding a 50 per cent stake in the southern island of Phu Quoc is set to be the first location in Vietnam to permit local people to gamble on its premises, contributing to the creation of a new multi-billion dollar industry in Vietnam, which has so far endured a turbulent path.

There are numerous hopeful gaming resorts in the works throughout Vietnam, but the government has so far only granted the go-ahead to the Phu Quoc complex. It is believed that the opening of the project in 2021 can eventually lead to others.