After signing a daring deal in February to launch a US$2.2 billion resort and casino on Korea’s Jeju Island, the chairman of a little known Chinese real estate developer raised HK$661 million (US$85 million) to develop the project. Now, however, investors are finding that funding for the project is taking a backseat to their new business partner’s $53 million private jet.
In early February, Landing International Development Ltd, an Anhui-based real estate company which went public in Hong Kong via a backdoor listing, announced a joint venture with Genting Singapore Plc – the company behind one of the island nation’s two casinos, to develop Resorts World Jeju.
The project, on a South Korean island that is rapidly becoming a gambling haven for China’s wealthy classes rapidly secured backing from four institutional investors. At the time, Landing stated that HK$600 million of the new cash would be used toward future investment in and development of the casino project.
Buying a Jet and Paying Off Shadow Bankers
Now, according to a statement filed with the Hong Kong stock exchange, the company’s chairman Yang Zhihui has decided that job one is securing a private jet, worth US$53 million (HK$411 million). Even better, the company is leasing the jet from Yang himself for HK$75 million for the next seven months.
Of the remaining proceeds of the share sale, another HK$200 million will be spent to “speed up the whole construction process” of an unrelated residential project owned by the company in Hunan and to pay off debts incurred through the shadow banking sector.
Explaining the need for the private jet, the company’s statement explained that,
“The aircraft could also increase the group’s efficiency and competitiveness by offering premium and efficient travelling services to its high-net-worth guests and customers for the future sale of the prime residential properties of the Jeju project, as well as its premium guests to the gaming and integrated resort when it opens progressively in the year 2017.”
Landing is currently unable to put the funds to use on the Resorts World Jeju project because it has yet to receive final approval from the provincial government.
Jeju Becoming a Popular Resort Destination
Jeju island has become a popular destination for Chinese tourists due to its legalised gambling industry, beaches, and proximity to the mainland. The island is only 533 kilometres (331 miles) from Shanghai.
In December last year, Dalian Wanda announced that it will be building the Jeju Dream Tower after signing a contract with an affiliate of South Korea’s Lotte Tour to build a pair of residential towers, both over 60 stories tall, on the island.