PH Resorts Group Holdings Inc., the listed tourism and gaming company of Davao-based businessman Dennis Uy, has entered into a debt restructuring agreement with Sy-led China Banking Corp. for its $600 million Emerald Bay casino resort in Cebu. The agreement, announced on Tuesday, involves the sale and leaseback of the 12.5-hectare beachfront property in Mactan, Cebu, which is integral to the Emerald Bay project.
The restructuring allows PH Resorts to settle a P3.1-billion bridge loan facility extended by China Bank in 2018. The company retains possession and use of the property to complete the construction and development of the Emerald Bay project. PH Resorts maintains an option to repurchase the land from China Bank, an arrangement that aligns with the InvestingPro Tip that the company holds more cash than debt on its balance sheet.
This move comes as part of a series of efforts by Uy's group to secure fresh financing amidst significant debts accumulated during its rapid expansion under President Duterte's term. Prior actions included downsizing its stake in telecommunications holding firm DITO CME Holdings to fund capital spending commitments. According to InvestingPro, the company's Market Cap stands at 991M USD.
On Tuesday, PH Resorts also announced the signing of a non-exclusive and non-binding Memorandum of Understanding (MoU) with Cebu-based AppleOne Properties for a potential investment. AppleOne, owned by couple Ray and Venus Manigsaca and known for projects like Sheraton Cebu Mactan Resort and AppleOne Equicom Tower, may invest in PH Resort’s subsidiaries with the intention of obtaining at least a majority equity interest in the Emerald Bay project.
The two parties have 60 days to finalize negotiations according to the MoU. Gabriele D. Aguila, head of equity research at stock brokerage house Unicapital Securities, viewed this potential partnership as positive news for PH Resorts as it provides "the much-needed runway to address shortfalls after the [Bloomberry] investment plan earlier this year failed to materialize."
The announcements led to a surge in PH Resorts' share price, which ended Tuesday's session up by more than 8 percent to P0.67 per share. The company still needs additional resources to complete the Cebu casino project after talks with gaming and ports tycoon Enrique Razon Jr.’s Bloomberry Resorts Corp. fell through earlier this year. The InvestingPro data indicates a 1 Week Price Total Return of 3.8%.
For the first half of 2023, PH Resorts reported total assets of P18.8 billion against liabilities of P14.1 billion, which includes P6.1 billion in loans. Losses during this period increased to P1.1 billion, compared to P333.1 million a year ago, primarily due to interest payments. The economic downturn, exacerbated by the COVID-19 pandemic, has forced Uy's group to sell assets like logistics firm 2GO Group Inc. and the Malampaya deepwater gas-to-power project. InvestingPro's data also shows a Revenue Growth of 30.27% for the last twelve months up to Q2 2024, indicating a potential recovery trajectory.
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