The German subsidiary of European real estate developer Sybil Group is reported to have acquired a casino license for the state of Saxony-Anhalt.
The head of Sybil Group, Pinni Sarfati, received the concession in January from Saxony-Anhalt Finance Minister Jens Bullerjahn for a fee of €1million, reports Israeli news source Haaretz.
The development being considered is for a casino-resort complex with four hotels of five-star caliber combining for a total of 1,500 rooms, plus a retail shopping center, restaurants, conference space and a riverside marina. Investment is estimated to be somewhere between €300 million and €500 million.
Sarfati said “people who understand this field in Europe” had been brought into the project, including former Queenco CEO Dror Mizeretz.
Saxony-Anhalt is currently served by three small, state-owned casinos, which have had their share of problems in recent years. In May 2008, the government had to give the casinos €1 million just to stay afloat, and considered selling them.
For Sybil Group, the project would be a departure from its proven success formula. The company generally purchases existing retail sites in Central-Eastern Europe that it has identified as suitable for expansion into commercial hubs, entertainment centers, wholesale centers and retail parks. The company has developed a unique analysis model just for this purpose.
The scale of the project would also be a challenge for the company, which saw its biggest investment to date in the €120 million Maximus International Fashion Wholesale Center in Poland. The center has over 670 tenants in four halls with a total of more than 100,000 square meters, with four additional halls under construction. From its combined activities in Czech Republic, Germany, Hungary, Poland and Romania, Sybil Group had gross revenues of €620 million in the first nine months of 2009.
When questioned about the financing of the project by Haaretz reporters, Sarfati replied, “All the capital for this project will come from outside. The subsidy we will receive from the German government will be part of our equity, as will funds from partners we will bring in.”
But according to Haaretz, Sybil Europe and subsidiary Sybil Germany together owe bondholders NIS 200 million-about €37.2 million-on two bond series currently trading at yields of 30 percent to 40 percent. Adding to the concern about being able to repay investors is the fact that, for the first nine months of 2009, the two Sybils have bank debts totaling NIS 800
Sarfati dismissed the worries, saying, “Sybil has always been able to handle big projects. The American investment bank Miller Buckfire is our financier. The bank’s CEO, John Orem, is handling things for us. Orem has arranged billions for Sheldon Adelson. Orem made some inquiries for us, and we have already been contacted by four or five international investors who are interested in our project.”
When asked if Sybil Group might wind up being only a minority partner in the project, Sarfati said, “We won’t mind having a minority holding in a project worth €2 billion.”