Intrigue swirls around Ho Tram Strip

It follows claims the company’s chief executive officer was unjustly forced out of his job.

Lloyd Nathan, CEO of Canada-based Asian Coast Development Limited (ACDL), on May 17 filed a lawsuit to New York State Supreme Court saying that Philip Falcone, the owner of Harbinger Capital Partners - which is a financing partner at the project, Anthony Sanfilippo, chief executive officer of Pinnacle Entertainment - which holds 23 per cent of stakes at ACDL and ACDL chairman Robert Wolfe have put Nathan on administrative leave without just cause, foreign media reported.

The leave was made  just two days after ACDL obtained an amended investment certificate from the Vietnamese government for its $4.2 billion integrated resort in southern Ba Ria-Vung Tau province, allowing it to open the first resort in line with a casino. Reportedly, Nathan wanted to leave ACDL last October, while the company tried to convince the Vietnamese government to adjust its investment certificate, but the company induced him to stay.

“By placing Nathan on so-called administrative leave as of April 5, 2013, without any basis for doing so,” the defendants showed that they “only induced him to stay long enough to benefit from his ability to obtain the amended investment certificate and to avoid a management change that might prejudice the application to amend the investment certificate,” Bloomberg News quoted Nathan as saying in the suit.

ACDL said it had “no comment on pending legal matters” when contacted by VIR last week.

Ho Tram Strip, one of the largest integrated resort complexes in Vietnam, was started in 2008 on a 164 hectare site along a 2.2 kilometre beachfront about a two-hour drive from Ho Chi Minh City. Plans for the ocean-front development to ultimately include two integrated resorts with gaming facilities and an additional three five-star resorts, a Greg Norman designed championship golf course and other related real estate development.

ACDL initially announced to open the phase A1 of the project in February 2013 with the 554-room hotel, casino and resort elements of the project. But the opening has been delayed so far and ACDL in March received notice from MGM Hospitality of its decision to terminate its contract to manage the phase 1.

To develop the phase 1, ACDL is reliant upon a $175 million credit facility from a syndicate of Vietnamese banks to fund the phase 1. But the banks suspended funding under the credit facility to wait for the amendment of the firm’s investment certificate.

Now, even though ACDL gained the amended investment certificate from the Vietnamese government, Pinnacle Entertainment on May 1 said that significant risks and challenges remained to opening phase A1 of the Ho Tram Strip, as well as subsequent phases of the master plan for the project.

“These include the manner in which the phase A1 resort will be opened and operated, the resumption of funding by its Vietnamese bank syndicate, securing a working capital facility to operate the phase A1 resort, securing additional funding needed to complete the remaining elements of the Ho Tram Beach master plan, and remaining in compliance with its amended investment certificate,” said the Pinnacle report.

As a result of the current circumstances, Pinnacle recorded an impairment charge of $92.2 million, writing down the remaining asset carrying value of its investment in ACDL.