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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Vietnam government OKs changes to development partly owned by Pinnacle Entertainment

5 April 2013

The government of Vietnam on Thursday formally approved requested amendments to the investment certificate of Asian Coast Development in the company’s planned Ho-Tram Strip project that is 24 percent owned by Pinnacle Entertainment, Inc.

Banks had suspended a $175 million credit agreement for the project until the government had approved the amendments. Last month, MGM Resorts International canceled its plans to operate the first phase of the development, which is complete and includes a 541-room hotel-casino.

The beachfront development is located roughly two hours from Ho Chi Minh City, which was formerly known as Saigon.

“A key concern is the lack of a gaming operator at present,” Union Gaming Group Managing Director Bill Lerner told investors. “We don’t believe that the granting of the investment certificate will catalyze MGM to reconsider.”

Asian Coast Development, which is based in Canada, is constructing a second 559-room hotel tower at the development, along with an 18-hole Greg Norman-designed golf course.

Asian Coast Development CEO Lloyd Nathan said the project would move forward with an opening, but he didn’t specify an opening date.

Pinnacle wrote down $25 million of its $110 million investment in the development last year.

Analysts said investors are more focused in Pinnacle’s planned acquisition of rival regional casino operator Ameri­star Casinos for $869 million and the assumption of $1.9 billion in debt, rather than how the Vietnam project might impact the company’s bottom line.

Lerner thought the Ameristar deal “reduced the relative risk of (Pinnacle’s) stake in Vietnam.”