LRWC commits to invest P4 B in casino project

MANILA, Philippines - Leisure & Resorts World Corp. (LRWC) reiterated that it is still part of a $1-billion casino and hotel complex along Roxas Boulevard, saying it has committed to invest about P4 billion in the project alongside Belle Corp. and Macau casino operator Melco Crown Entertainment Ltd.

LRWC cited the memorandum of agreement it signed with Belle on July 5, 2012, which states the former would provide funding to the Sy-led company equivalent to 30 percent of Belle’s interest in the project or an estimated P4 billion.

LRWC earlier raised more than P3 billion, of which P2 billion came from a bank loan and P1.125 billion came from a private placement of shares.

In exchange for its contribution, LRWC wholly-owned unit AB Leisure Global Inc. shall be 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.

Aside from this, AB Leisure shall be paid fees equivalent to a 30 percent of Belle’s 50-percent share of the EBITDA (earnings before interest, taxes, depreciation and amortization) from casino operations or 30 percent of Belle’s 15 percent share of the net win, whichever is higher, after deducting Belle’s royalty which is based on gross win.

The project was originally a partnership between Belle and LRWC. Controlled by the family of Negros Occidental third district Rep. Albee Benitez, LRWC was supposed to manage the casino and split EBITDA evenly with Belle for a 10-year period.

Belle finished most of the casino structure in January but completion of its interior has been delayed due to limited funding. This has led to LRWC relinquishing its right to operate the casino to make way for the entry of regional casino giant Melco, a joint venture between Macau gaming mogul Stanley Ho and Australian billionaire James Packer.

Analysts said the casino project, once operational, will become a major driver of growth for LRWC, which operates bingo and other interactives games in the Cagayan Economic Zone Authority.

The project will form part of a huge gambling development dubbed Entertainment City, which the government hopes will turn the Philippines into the world’s number two gaming destination ahead of Las Vegas and Singapore.

Lawrence Ho, co-chairman and chief executive officer of Melco, said they are “confident that this project will not only move us closer towards realizing our vision of becoming one of the leading gaming companies in Asia, but will also provide us with a platform for further expansion in Asia, allowing us to capitalize on future opportunities to drive long term shareholder value.”