Deal to sell Canberra Casino scrapped amid regulatory delays

The listed Aquis Entertainment said on Wednesday the proposed transaction had been terminated just weeks after iProsperity asked for an extension as it was yet to receive approvals.

Hong Kong gaming mogul Tony Fung controls Aquis and was offloading the Canberra property in a $32 million sale, after a deal was struck in late 2018 by the funds manager controlled by Michael Gu.

Fung had picked up Casino Canberra from Casinos Austria for just $6.5 million in 2014 and then pumped capital into it. The ACT government in 2018 rejected a proposal by Aquis to transform the casino and the surrounding precinct.

The company had in 2015 unveiled plans to outlay $330 million on overhauling the Glebe Park precinct, including hotels, prestige brand shopping, and a new convention centre.

Fung is best known for dumping plans in 2016 to incorporate a casino in his controversial planned $8 billion Aquis resort in Cairns, paving the way for rival gambling firms to submit proposals.

He is still active and his private Aquis Australia is developing a new $440 million hotel on the beachfront in Surfers Paradise.

iProsperity is one of the largest hotel owners in Australia and last year bought a 17-strong portfolio for $212 million.

iProsperity’s Blue Whale Entertainment entity was to acquire the listed Aquis in a structured deal using cash, loan repayments and a three-year share buying agreement.

Hong Kong gaming mogul Tony Fung was offloading the Canberra property. Picture: Richard Gosling

Fung owns about 86.99% of shares in Aquis but the deal was subject to ACT gaming regulatory approvals being obtained by December 21.

Aquis and Mr Fung had been seeking to agree with Blue Whale for satisfaction of the conditions. But no agreement between the parties regarding an extension was reached.

“Accordingly, Aquis and ACH have issued a notice of termination to Blue Whale,” Aquis told the ASX. The termination will become effective on February 6.

Aquis said it had also sought payment of the $280,000 break fee from Blue Whale but the future of the operation is unclear.

“Following the termination of the sale transaction, the board will update the group’s strategies to ensure continual improvement and growth in the business, including consideration of any new business opportunities which may arise,” the company said in a statement.

The agreement, if finalised, would have enabled Blue Whale to become majority shareholder of Aquis and as a result, controlling shareholders of Casino Canberra.

The deal was subject to Blue Whale engaging in a probity assessment and gaining the necessary regulatory approval from the ACT Gaming and Racing Commission by the December deadline.

“The commission worked proactively with Blue Whale and Casino Canberra to facilitate this assessment, but the information required has not, to date, been provided by Blue Whale. As a result, the probity assessment was not completed,” an ACT government spokeswoman said.

The government said the commission was informed by Casino Canberra on Tuesday the proposed transaction was not to proceed.

“The proposed agreement and the subsequent decision not to proceed by the parties were commercial decisions, independent of government and the commission,” the spokeswoman said.

Aquis chief executive Allison Gallaughe said that the application was not rejected. “No decision was issued, nor indicative decision, as the review was not completed,” she said.

Instead, she said that no agreement was reached between the parties to an extension of time to allow completion of probity and “accordingly Aquis issued a notice of termination to Blue Whale”.

“The business is viable, cash positive and the board looks forward to seeing further improvements in the future,” Aquis said.