RSA goes into casino, broadcast

MANILA, Philippines - The local business community is abuzz with rumors that San Miguel Corp. president Ramon S. Ang has entered the broadcasting and casino resort businesses.

 According to the rumor mill, Ang, a prime mover of Southeast Asia’s largest food and beverage and packaging conglomerate’s diversification strategy, now partly owns broadcast media firm Solar Entertainment Corp. alongside movie industry pillar Wilson Tieng.

Stock market pundits said Solar Entertainment has partnered with Ang to acquire up to a 50-percent stake in the Philippine operations of Panama-based branded casino and hospital services firm Thunderbird Resorts Inc. for around $52 million.

Cash-strapped Thunderbird fended off the possible closure of its two casinos – one located in San Fernando, La Union and another in Binangonan, Rizal, two of the country’s hottest tourist destinations – following an agreement signed with Solar Entertainment.

In a disclosure last July, Thunderbird said it would focus on obtaining approval from the Philippine Amusement & Gaming Corp. for the $52-million equity financing from Solar Entertainment pursuant to a deal entered into in August 2011.

If the proposed transaction receives regulatory approval, Solar will invest into a newly-formed Philippine holding company (holdco) to which Thunderbird will assign all of its Philippine operations.

Solar will initially pay $25 million in exchange for a 32.47 percent interest in the holdco, primarily to be used to expand Thunderbird’s existing properties at Poro Point and Rizal, and to pay down debt.

Solar and its Filipino partner will have a 12-month option from closing to pay the balance of $27 million to complete the purchase of up to 50 percent of holdco.  The additional funding will allow Thunderbird to develop new properties in the Philippines. 

Thunderbird will own the remaining 50 percent of holdco and continue to manage the hotels and casino under its brand hotel and casino names.

Thunderbird conquered the Philippine market in 2005, investing a total of P2.4 billion from 2006 to 2010 (which according to Pagcor accounted for only 69 percent of the amount the group originally committed to invest during the period).  

It incurred over $120 million in debt, leading to construction and start-up funding delays for its India casino project.  The company was forced to unload a 64-percent interest in its flagship Panama operations and four hotels in Peru to stave off increasing financial difficulties.

Thunderbird is counting on its partnership with Solar to grow its Philippine operations, the largest income producer for the group worldwide based on its 2010 annual report.

The company was given a new lease on life after Pagcor extended the gaming license of Thunderbird for 15 years or up to June 2027, provided the Poro Point and Rizal casino resorts pay a gaming tax of 30 percent and infuse an additional fresh capital of $30 million each.

Solar Entertainment is known for providing quality content with its roster of premier entertainment and sports channels such as ETC, 2nd Avenue, Jack TV, Solar Sports and Basketball TV.   Known for pioneering television block timing in the country’s broadcasting industry, the group operates six cable channels and three free TV channels and  a film distribution company.

The Solar Group owns 34 percent of RPN 9 and intends to bid for the sequestered network.  The Privatization Council is reportedly working the sale of the government’s stake in RPN 9 to further boost the country’s cash reserves.

Ang, currently San Miguel’s single largest shareholder, said in June the conglomerate was seriously considering entering the broadcast industry to add to its growing business portfolio. He said he received some offers that would allow the group to invest in media but declined to give out other details.

He also said the conglomerate was interested in bidding for government-owned stations RPN9 and IBC-13 when they are put up for sale.

While he suggested the privatization of Pagcor in 2010, Ang was quoted in Esquire magazine’s September issue that  San Miguel would not invest in any gambling business as he noted the “undesirable” activities related to it such as prostitution and illegal drugs.

It would be recalled that Ang made an offer to acquire Pagcor for $10 billion with Malaysian magnate Robert Kuok as one of his partners.

Ang said the privation of Pagcor could transform the country into a big tiger economy.