AAEC could have lost US$7.4bn in profits due to LVS breach of contract

AAEC is suing Las Vegas Sands for over US$12m.
AAEC is suing Las Vegas Sands for over US$12m.

According to a report, AAEC may lose up to MOP$57.9bn (US$7.4 billion) in profits due to the breakdown of its agreement with Las Vegas Sands (LVS) to bid for a Macau casino licence.

Macau.- A report commissioned by Marshall Hao Shi-Sheng, Asian American Entertainment Corporation’s(AAEC) CEO, revealed the company may lose up to MOP$57.9bn (US$7.4 billion) in profits after Las Vegas Sands breached its contract for a casino licence in Macau.

AAEC and LVS collaborated in 2001 to bid for one of the concessions to operate casinos in Macau. 

As a result of this operation, LVS could choose to buy 27.5 per cent of AAEC’s shares, and the former company would hold 72.5 per cent of the new enterprise.

However, shortly before the concessions were awarded, the US operator switched partners and joined forces with Galaxy Entertainment.

AAEC initiated the lawsuit in 2012, arguing that Sands breached its contract for a casino licence in Macau in 2002.

It is seeking damages calculated at around 70 per cent of Sands’ Macau profits from 2004 to 2022. 

Last October, Dave Sun Minqi, senior vice president and chief financial officer of Las Vegas Sands Macau, told the court that AAEC’s suit for over US$12bn was exaggerated.

He said that the MOP96.45bn (US$12bn) amount claimed by AAEC was based on the “operating profit” in Macau and it was not a “comprehensive consideration” of the group’s capital expenditures in the Macau market and related depreciation and amortisation costs. 

The report commissioned by Marshall Hao Shi-Sheng argued that any claim statement should only be made for the period from the 2002 ruling to 2020, during which actual historical accounting data can be provided.

It rejected LVS’s statement that its investment higher than initially expected should be included in the claim, and additional capital expenditures should also be taken into account

It stated that AAEC’s investment was as much as LVS’s investment in Venetian Macau. It stated that based on initial investment assumptions, AAEC Group invested MOP$252bn in the market.

As Asian Gaming Brief revealed, the report also stated that the MOP$3.6bn paid in gaming tax and MOP$400m in corporate tax have been included in the group’s net profit, so any analysis of damages should not be further revised downward for such items.

Last July, former gaming advisor Carlos Lobo gave further testimony in court on the relationship between Las Vegas Sands and AAEC.

Referring to Macau’s tender process, he told the court that AAEC lacked experience in the casino sector, adding that the company also wanted to develop a bank in exchange for a gaming concession, which had raised concerns about money laundering.

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