There is uncertainty over US-based casino operator Pinnacle Entertainment’s investment in an integrated resort in Vietnam after it was revealed that the company in charge of the project has defaulted on certain construction deadlines.
In August last year, Pinnacle took a significant stake in Asian Coast Development, the company behind the Ho Tram Strip project in Vietnam. In 2008, ACDL received an investment certificate from the Vietnamese government for the development of the strip, which outlined deadlines to complete the phases of the development. Its subsidiary, Ho Tram Project Company, then obtained an official letter from the provincial government extending the deadline under the investment certificate.
In a SEC filing, Pinnacle revealed that HTP is currently in default of the deadlines set out in the letter for completing the first phase of the first resort, which was due to open in the first quarter of 2013. ACDL and HTP have applied to amend the investment certificate to allow for more time for completing the first phase.
ACDL has advised, however, that HTP is reliant on a £175m credit facility from a syndicate of Vietnamese banks to fund the first phase of the project but those banks have now suspended funding under the credit facility until the amendment to the investment certificate has been granted. As a result of the suspension, Pinnacle said, ACDL/HTP does not have sufficient cash resources to complete the first phase of the Ho Tram project.
“It is uncertain whether the first phase of the first resort will be completed. It is not clear what would happen if the first phase is not completed, including what actions the Vietnam government might take in such event. If the first phase is not completed, this would have a negative impact on our investment in ACDL and we could lose our entire investment in ACDL,” Pinnacle said in the filing.
