Investors in Vancouver-based casino developer Asian Coast Development Ltd. (ACDL) are fighting in BC Supreme Court over loan terms they allege amount to investor misconduct.
ACDL is building a $4.2 billion casino development in Ho Tram, Vietnam, and plans to open the first of five planned resorts, the MGM Grand Ho Tram, in February 2013.
On January 18, a group of the company’s Cayman Islands and U.S.-based investors filed suit against Cayman Islands-based Harbinger Capital Partners Master Fund I, Ltd. and its subsidiary, Luxembourg-based Harbinger Capital Investments S.a.r.l. The plaintiffs are seeking damages for what they claim to be unlawful interference with economic relations.
The court document alleges that the defendants, with a $35 million investment in ACDL, unlawfully pressured ACDL into entering into a $3 million loan agreement in 2009 on terms equivalent to 50% interest, compounded annually, in the first two years and 42.5% in the subsequent three. It also claims that, when ACDL needed a further $12.5 million loan in 2010, the defendants pressured the company into a management shakeup and further onerous loan terms.
The plaintiffs claim both loans caused “immediate detriment” to ACDL, “to the ultimate detriment” of the plaintiffs.
None of the allegations have been proved in court.
In an email responding to the civil claim, Lloyd Nathan, CEO of ACDL, said: “ACDL is not a party to that recent filing and is not in a position to comment on a dispute before the courts among its shareholders.”
He added that the project is “progressing rapidly” and that the company expects to complete its next phase on schedule.
While Nathan said that the 2009 global financial crisis and the current economic instability have created challenges for projects like ACDL’s, he expressed confidence in the project’s future.
“With half of the world’s population, 5% of the world’s gaming licences, and a pent-up demand for gaming, there is a significant demand [and] supply imbalance in Asia, and it continues to set the pace for the world in terms of growth in the gaming industry,” he said. “There are limited short- to medium-term opportunities for the creation of large-scale integrated resorts in Asia, and the Ho Tram Strip in Vietnam represents the next big step for growth in the region.” •
