Lawrence Ho-Controlled Firms Sign Deal to Buy 51% Stake in Russian Casino Project

   By Yvonne Lee and Kate O'Keeffe 
 

HONG KONG--Two firms backed by Macau gambling mogul Lawrence Ho have signed agreements to buy a controlling stake in a US$630 million casino-resort project in Russia, the latest country hoping to attract China's prized high rollers.

Hong Kong-listed investment firm Summit Ascent Holdings Ltd. (0102.HK) has agreed to buy a 46% stake in the project on the outskirts of Vladivostok, while Melco International Development Ltd. (0200.HK) will take a 5% stake, the companies said in a statement Wednesday.

Two Russian businessmen primarily involved in the construction business will own the remaining 49% of the venture, the statement said without identifying the men. People familiar with the matter said that the people, who have no casino experience, are politically connected.

The news that an experienced Macau casino operator has plans to build in Russia is a boost to the country's gambling industry, which is rarely on the radar of gambling executives and bank analysts due to corruption concerns and lack of clarity surrounding casino the regulatory structure there. Investment opportunities in the Philippine capital of Manila, another location where Mr. Ho is building a casino, were met with similar skepticism initially but many analysts have since come around on the idea.

Mr. Ho's companies cited Russia's proximity to northeast China, its lack of a territorial dispute with China, its low tax rate and Vladivostok's tourism potential as reasons for the investment.

The project hopes to attract Chinese high rollers, which single-handedly transformed Macau into the world's largest gambling market. The Chinese territory's $38 billion in gambling revenue last year made it six times the size of the Las Vegas Strip.

Investors in Mr. Ho's casino companies have not yet reacted positively to the plan. Shares in Melco Crown Entertainment Ltd. (6883.HK), a joint venture backed by Mr. Ho and James Packer--the sons of Macau gambling magnate Stanley Ho and the late Australian casino-and-media magnate Kerry Packer--fell around 4% after the deal was first reported by The Wall Street Journal last week.

Shares of Summit Ascent have been suspended from trading since June 10 as the company discussed its new business model with the Hong Kong stock exchange. The company, in which Lawrence Ho is the largest shareholder with a 37.1% stake, will resume trading Thursday.

Write to Yvonne Lee at [e-mail] and Kate O'Keeffe at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires