Sy group hikes interest in City of Dreams
While City of Dreams Manila is still in its early days as an integrated gaming resort, gaming firm Leisure and Resorts World Corp. (LWRC) has decided to cash in its chips to trim debt and focus on its core bingo parlor and gaming businesses.
LWRC signed a deal to unload its share of net gaming revenues from CoD Manila in favor of Sy family-led leisure estate and gaming conglomerate Belle Corp. for P5.09 billion, both LWRC and Belle disclosed to the Philippine Stock Exchange Friday.
The company’s economic interest in CoD Manila, which opened only two years ago, is equivalent to up to 30 percent of Belle’s share of net revenues under the lease and licensee agreements with Macau casino giant Melco Crown.
Overall, LWRC’s share of earnings ranged from 8 to 10 percent of CoD Manila’s gaming revenues, Belle vice chair Willy Ocier told the Inquirer.
Asked why LWRC was selling its interest to Belle, Ocier—who also sits as LWRC director—said the company wanted to focus on its core businesses as well as pay down some debt.
LWRC and Belle were the original partners in the integrated casino project prior to the entry of Melco Crown in 2012.
With the entry of Melco Crown, LWRC’s wholly owned subsidiary AB Leisure Global Inc. (ABLGI) signed an amended memorandum of agreement with Belle and affiliate Premium Leisure and Amusements Inc. (PLAI). In exchange for ABLGI’s P4-billion contribution to the project, it was entitled to 30 percent of the fixed yearly income generated from the leasing of all commercial space in the project, inclusive of the hotel, retail and casino premises.
ABLGI was also entitled to fees equivalent to 30 percent of PLAI’s 50-percent share of the cash flow from casino operations or 30 percent of PLAI’s 15-percent share of the net win, whichever is higher, after deducting PLAI’s royalty, which was based on gross win.
The P5-billion payment by Belle for the termination of its casino revenue-sharing deal with LWRC would be equivalent to an incremental value of about P4.16 a share, said Eagle Equities president Joseph Roxas. He estimated that the deal would boost LWRC’s book value to around P9 a share.
Shares of LWRC rose by 3.52 percent to close at P5.30 per share on Friday after the sale of its interest in CoD Manila was announced. This gave LWRC a market capitalization of P6.14 billion.
Under the deal, Belle agreed to pay the LRWC group a total of P5.09 billion, with P1.02 billion settled upon signing and the balance at the end of March 2017.
Through subsidiary AB Leisure Exponent Inc. (ABLE), LWRC provides amusement and recreation to the public in traditional, electronic, pulltabs and rapid bingo games. ABLE and its subsidiaries and affiliates operate 129 bingo parlors nationwide.
The group likewise has a 69.68-percent interest in First Cagayan Leisure and Resort Corp., which has an existing license agreement with the Cagayan Economic Zone Authority to develop, operate and conduct internet and gaming enterprises and facilities in the Cagayan Special Economic Zone Free Port.
