Lao Holdings and its subsidiary Sanum Investments Ltd were responsible for running the Savan Vegas Hotel and Entertainment Complex in Savannakhet, Laos. The company lost control of its casino hotel back in 2012 after the Laos government claimed that Sanum Investments had not filed its taxes properly and owed the government over $23 million in penalties and back taxes.
As a result, the government decided to take over the property and went on to appoint San Marco Capital Partners to take care of the interim management. The Laos government invited tenders as it looked to dispose the property and recover the $23 million supposedly owed in back taxes. A total of six companies were shortlisted for the sale but the plan did not work out. In the end, San Marco president Kelly Gass and the Laos government worked out a deal with Macau Legend Development Ltd, a Macau based casino establishment who was willing to put down $42 million to purchase the Savan Vegas earlier this year.
Macau Legend Development also succeeded in getting the Laos government to agree to its terms which included signing a fifty year monopoly agreement over casino operations in 3 Laos provinces, one of which is the province where the Savan Vegas is located. The deal has been opposed by Lao Holdings who state that Kelly Gass and San Marco were selling the property at fraction of what it was actually worth.
Lao Holdings filed two lawsuits in May 2016 over the sale of the Savan Vegas property. The first lawsuit was filed with an affiliate of the World Bank, which is the International Centre for the Settlement of Investment Disputes and the second lawsuit was filed with the United States District Court in Delaware. The lawsuit alleges that San Marco and Kelly Gass have no gaming management experience and did not conduct an open bidding process for the Savan Vegas sale which would have resulted in a much higher sale price for all the assets associated with the property.
San Marco Capital has filed a ‘motion to dismiss’ with the United States District Court in Delaware but Lao Holdings has countered that by filing a report stating that Gass and San Marco did not keep their fiduciary obligations and as a result the motion to dismiss must be denied completely.
In a statement to media, Jody Jordahl, president of Sanum Investments said, “The unethical and illegal way that San Marco Capital Partners and Kelly Gass have handled the potential sale of our assets is insulting to any person or company trying to do business in Laos. We hope that the court recognizes this and denies this motion to dismiss.”