An ongoing legal dispute in Laos has taken a new twist, leaving the future of a nearly 500-room hotel in doubt.
In a filing to Bursa Malaysia, RGB International, a maker of electronic gaming machines for casinos, said that “the tender for sales process for the Savan Vegas Hotel and Entertainment Complex in Lao People’s Democratic Republic was terminated by the Government of Lao PDR.”
The filing did not list a reason for the termination of the tender process.
The Savan Vegas, a casino hotel in Savannakhet, Laos, had been controlled by Lao Holdings and its subsidiary Sanum Investments before 2012, when the Laos government seized the resort operation, claiming that Sanum owed $23 million in back taxes and penalties. Lao Holdings, however, protested the high taxes that it said included “the adoption of an overwhelmingly expropriatory 80 percent tax on gaming revenues (90 percent when coupled with Laos’s VAT rate.” The government began looking to dispose of the property to other investors.
By late 2015, a U.S.-based private investment company, San Marco Capital Partners, was tapped to organize the sale as “exclusive sales agent” on behalf of the Laos government.
But in late March of this year, San Marco Capital Partners announced a shortlist of six parties interested in buying the resort, which included RGB International.
But last week, Lao Holdings filed three legal actions alleging violations of a 2014 agreement with the government of Laos. The firm said the agreement stipulated that the sale of the Savan Vegas and other assets should be “for maximum value to the benefit of all parties.”
"All of the actions taken by the Lao Government over the past two years have been a blatant attempt not only to avoid, but systematically obliterate its legal obligation to work with us in good faith," Jody Jordahl, president of Sanum Investments, said at the time. "If the Government had followed the terms of our agreement, we would not be taking these actions."
In the latest filing, Lao Holdings alleges that San Marco was paid nearly $2 million from Savan Vegas revenues to run and sell the property, but its owner served only the “corrupt and totalitarian” Laos government.
And now the tender has been canceled with no reasons shared, and there doesn’t seem to be a clear future for the casino and its hotel. Is Lao Holdings taking the property back? Will the accusations be settled out of court?
As a Forbes article about the legal disputes last year noted, the buyer of this hotel could get a foothold in a growing market. We'll have to wait and see what opportunities come next.