Leisure estate and gaming firm Belle Corp. has sealed a deal to take in Macau casino giant Melco Crown Entertainment Ltd. (MCE) as strategic partner in the $1-billion entertainment complex that will rise in front of Pagcor Entertainment City in Parañaque City by next year.
The cooperation agreement places Belle as a co-licensee and owner of the land and buildings in the facility, while Hong Kong-listed MCE would be a co-licensee and operator of all the facilities. Belle and MCE will have an equal sharing of economic interest arising from the project.
“As a result, Belle and MCE are expected to make equal investment contributions to the project,” Belle told the Philippine Stock Exchange Thursday.
Belle and MCE will each have an estimated economic interest of 50 percent in the project instead of revenue sharing, said Cora Guidote, investor relations officer of Belle’s controlling stockholder SM Investments. Asked about the share of Leisure & Resorts World Corp. (LR), she said LR would get an estimated 6 percentage points of Belle’s share, resulting in a net economic interest of 44 percent for the Belle-SM group.
Economic interest from the project will be derived not just from gaming operations but also from the leasing of commercial space in the entertainment complex.
LR was Belle’s original partner in the project prior to the entry of Melco. Under the old arrangement, LR was to get 15 percent of net winnings, or 50 percent of the casino’s cash flow, whichever was higher. But while its share will decline, the overall pie is seen growing sharply with the entry of MCE as partner.
Guidote said Belle and MCE would split the cost of completing the project, thereby contributing $500 million each to the venture. This is a slight modification of the agreement that was earlier disclosed, which stated that MCE would contribute $580 million and become the single largest investor.
“We are confident that MCE will bring its expertise in operating a highly successful integrated resort complex and strongly contribute to promoting the Philippines as one of Asia’s premier tourist destinations,” Belle vice chairman Willy Ocier said.
MCE is a developer and owner of integrated resort facilities focused on the Macau market. Its “City of Dreams” complex is a highly successful project that houses a gaming facility, an upscale retail operation, restaurants and bars, and hotels such as Crown Hotel, Grand Hyatt Hotel and Hard Rock Hotel. The complex is also known for “The House of Dancing Water” show.
The Macau casino group—which is co-owned by Lawrence Ho Yau Lung, son of casino mogul Stanley Ho Hung Sun and Australian billionaire James Packer—is building its second integrated resort in Macau called “Studio City.”
MCE is upbeat on the Philippines, earlier citing the country as a popular tourist destination in Southeast Asia and closely located to a range of important tourism markets, including South Korea, Taiwan, Japan and China. Its investment in the Philippines is part of its thrust to expand “into new jurisdictions where the company expects strong returns on capital will further diversify the company’s exposure in Asia.”
The Macau group sees its experience in developing world-class integrated resorts such as the City of Dreams in Macau to allow it to take advantage of the anticipated growth in the leisure and tourism industries in the Philippines.