BCN World's main investor does not buy land to build $6 billion resort by expected deadline

Barcelona (ACN).- Veremonte has decided not to buy the land to build the BCN World macro-casino and holiday resort yet and it will wait until it better knows the town-planning project's details, which are currently being defined by the public authorities. The main company behind the holiday resort had an exclusivity right to purchase some 500 hectares of land from a Caixabank's subsidiary until December 10 at midnight for €380 million. Veremonte confirmed on Wednesday it will continue to work on the $6 billion BCN World project with Hard Rock, Melco, Value Retail, Melià and Caesars Entertainment and it could buy the land at a later stage. After knowing about Veremonte's decision, the Catalan Finance Minister, Andreu Mas-Colell, announced he had reached an agreement with Caixabank to manage, for an 18-month period, the sale of the 150 hectares of land where the macro-casinos should be built, which are located in Catalonia's Costa Daurada, next to PortAventura theme park. The agreement will be signed on Thursday and the Catalan Government will mediate between the land owner and potential buyers at no cost. Other companies can now present offers and buy these plots, even separately, or they can also buy the other 350 hectares directly to CaixaBank. Furthermore, the Catalan Executive also confirmed that the BCN World project will carry on, "with or without Veremonte". However, Xavier Adserà, the private company's CEO, stressed that any other investor buying the land will have to reach agreements with them, since Veremonte, Melco and Hard Rock have been pre-selected in the public tender to be granted 3 of the 6 macro-casino licenses the project foresees. On top of this, Adserà was sceptical that any other company will be buying the land at its current price, taking into account the "uncertainties" about the area's town planning. Adserà stated that currently, a €380 million investment is "unviable" since there are doubts about the definitive town-planning and therefore the potential use of the land. In fact, the Catalan Parliament approved the legal framework for the holiday resort in May, but the definitive town-planning project that will detail the exact construction heights and volumes is still being defined, following the calendar set in spring. The first version should be issued in late January and the definitive version should be approved during the summer months, in order to allow construction as from autumn 2015.

Veremonte has added additional uncertainties about the BCN World project by not executing his right to buy some 500 hectares of land for the project from a CaixaBank's subsidiary before the second deadline for doing so was about to expire. In fact, the company chaired by Enrique Bañuelos had initially reached an agreement with La Caixa (which owns most of caixaBank) to buy the plots of land to build BCN World before the summer of 2014. However, when the first deadline was about to expire they agreed to renegotiate the timing but keep the initial price. Veremonte had to pay a €13 million fee for extending the deadline until December 10 at midnight, which gave them the right of being the only possible buyer until that day. However, the day has arrived and Veremonte has announced they will not be buying the land for €380 million at the present moment and they will be taking the risk of doing it at a later stage. However, they insisted on their will to carry on and transform the area in "Europe's first holiday resort", highlighting that many international investors are showing interest in the project.

A project announced in September 2012

BCN World involves 6 mega-casinos, large-size hotels, shopping malls, convention centres, theatres, a stadium, theme parks, golf courses, a beach club, technology institutes, smart city developments and an urban track for electric car racing. The project is expected to create 17,000 jobs in the construction phase (directly and indirectly) and 5,000 jobs per mega-hotel, with an investment of $6 billion. The investment was announced in September 2012 as an alternative to Sheldon Adelson's Eurovegas project. However, in order to make it happen, significant regulatory modifications were needed so as to adapt the urban planning of the area but also to modify essential aspects regarding taxation and gambling.

At that time, Veremonte – leading the project – had already reached an agreement with La Caixa bank, which owns all the land around PortAventura, in order to buy the plots if the regulatory framework were modified to be a bit more advantageous to the project. The Catalan elections of November 2012 put the process to modify the legal framework on hold. A parliamentary commission was created in 2013 to study the project and hear expert opinions on tourism, taxation, gambling, money laundering, security, addictions, the environment, etc.

The governing centre-right pro-Catalan State coalition CiU needed the support of another party to pass the new legal framework but the ERC, their parliamentary allies, was sceptical regarding essential aspects of the project. Meanwhile, Veremonte started to announce the first international investors and provide a few more details of the project, although many aspects were still unknown. Finally, the CiU and the Catalan Socialist Party (PSC) reached an agreement in March 2014 to approve the new legal framework and urban planning. The new legal framework was approved on May 29 by the Catalan Parliament. The drafting of the detailed-town planning was starting, which should be ready in the first half of 2015. 

The new law made the taxes paid by casinos in Catalonia drop from the current 55% on profit to 10%. Casinos will also be allowed to issue credits to gamblers, although protection measures will be introduced for addicts. In addition, it allowed the setting up of casinos in the area to be occupied by BCN World in the municipalities of Salou and Vila-seca, although no gambling will be allowed within PortAventura amusement park. In fact, Veremonte, the company leading the BCN World project, has insisted on many occasions that families are also one of their targets. In this vein, Xavier Adserà stated at that time they are open to modifying certain aspects of the project in order to better protect minors. Furthermore, the new urban planning limits the construction of casinos, hotels and housing to 30% of the total surface area. However, the new law opened the door so that further surface area could be occupied in a later urban plan if the project reaches the maximum capacity currently allowed.

Furthermore, the public tender to issue the macro-casino licenses was launched in June and, on the 6^th of August, the Catalan Government issued a provisional list of the companies and joint-ventures that might be granted a license to build and run one of the 6 mega-casinos of the $6 billion BCN World resort to be developed next to PortAventura theme park. Veremonte and its partners were running for 4 of the 6 licenses. The first surprise was that Catalonia-based Grup Peralada – which runs casinos, luxury hotels, a golf course, an internationally-prestigious performing arts festival and vineyards – was one of the pre-accepted contenders. The second one: Caesars Entertainment – which ran in the last minute together with Veremonte – was left out for not fulfilling the basic requirements as the bid had only been filed by the Spanish company and therefore it did not meet the requirement of having a proven record of 5 years in casino management. The three other pre-accepted offers were filed by Veremonte-Melco, Veremonte-Hard Rock, and by Melco alone. In a press release, the promoter of the BCN World project stated that it welcomed the Catalan Government's first assessment of the candidates.