Catalist-listed Asia-Pacific Strategic Investments has signed two cooperation agreements with Timor-Leste’s vice prime minister, coordinating minister for economic affairs, minister of tourism and environment to acquire an exclusive casino licence and set up a bank in Timor-Leste. The agreements were signed on Feb 8.
According to the company, the proposed diversification into new businesses represents a potential entry into the financial and gaming sectors. The move is subject to shareholders’ approval at an extraordinary general meeting (EGM). Asia-Pacific Strategic Investments is currently in investments, real estate development and the provision of hotel management and hospitality services.
Under the casino cooperation agreement, Asia-Pacific Strategic Investments and its consortium will build a five-star hotel which includes a “respectable, high security, law abiding” casino. The company will also market the hotel and casino to international customers and promote tourism in other disciplines including seaports, yachting and scuba diving.
In return, the Timor-Leste government will issue the company an exclusive licence to develop the hotel and casino and ensure smooth operations by obtaining the necessary permits and coordinating with the respective government agencies.
The parties will also have to agree on a business plan including the number of gaming tables, hotel rooms and other amenities as well as tourism and transportation plans within three months of the execution of the agreement.
The banking cooperation agreement will see Asia-Pacific Strategic Investments setting up a bank with Timor Leste’s Banco Nacional de Comercio de Timor-Leste. Asia-Pacific Strategic Investments will have a 60% stake in the bank.
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Under the agreement, Asia-Pacific Strategic Investments will oversee the bank’s daily operations and maintenance, manage the bank staff, develop and implement operational procedures, develop plans to establish the bank for local and international customers, commercially develop the financial services and asset management businesses and propose plans for the establishment of an asset management business among others.
In return, the Timor Leste government will give Asia-Pacific Strategic Investments full access to conduct due diligence in the setting up of the bank and support in other ways including helping to obtain permits, licences and regulatory approvals.
The parties have agreed to negotiate and execute a definitive agreement within three months after the execution of the banking cooperation agreement.
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Both the casino and banking agreements will remain in effect for six months from the date of signing or until the agreement is executed. Either party may terminate the agreements by giving 30 days’ written notice.
Proposed issuance of convertible bonds
To meet the funding requirements of the new businesses, Asia-Pacific Strategic Investments is seeking to raise US$100 million ($135.5 million) worth of convertible bonds. The bonds will be subscribed by the company’s controlling shareholder, Oei Hong Leong, once they have been issued.
Oei signed a term sheet with the company on Feb 11. The term sheet will be valid for six months from the date of signing or any other agreed-upon date.
The bonds will carry an interest rate of 3% per annum and will mature five years after the date of issue, which has yet to be decided. The issue date will be determined on the progress of obtaining the licences for the proposed new businesses.
Bondholders may convert their bonds into new ordinary shares of the company with the conversion price fixed at 0.2 cents per share. The bonds may also be transferred to third parties, subject to the company’s consent.
Should the proposed issuance of the convertible bonds go ahead, the company intends to use US$60 million to fund the casino business, US$20 million to fund the new banking business, US$10 million to fund any business expansion plans in Timor Leste and US$9.8 million for general working capital.
For the 1HFY2025 ended Dec 31, 2024, Asia-Pacific Strategic Investments reported a loss of $1.3 million, compared to the $9,000 profit in the corresponding period the year before.
Shares in Asia-Pacific Strategic Investments last traded at 0.1 cents before its trading halt on the morning of Feb 10.
