The MOU was arrived at after CDC and MLRC agreed to identify certain issues and differences between them in connection with the lease of the Mimosa estate.
Under the MOU terms, MLRC will be given a re-entry mechanism to take back management and control of Mimosa provided it is able to comply with the requirements set forth by CDC and, in the alternative, for Mimosa to be leased by CDC to a new corporate vehicle to be formed for this purpose.
This new corporate vehicle, when established, shall be jointly owned and managed by MLRC and certain creditors, with CDC having one seat in the board. The latter shall have oversight functions in the new corporate vehicle until such time MLRC’s rentals in arrears shall have been fully paid.
Within a period fixed by the MOU, CDC and MLRC shall enter into a memorandum of agreement, providing for, among others, a new lease on Mimosa (which shall have the same lease period as the original lease agreement), new rentals and the payment scheme for MLRC’s rental in arrears to CDC.
While MLRC said the signing of the MOU is not the immediate solution to Mimosa’s problem, it has opened a big window of opportunity for the company to be able to get in new investors for the eventual operation and management of Mimosa and make it once again the company’s profit center.
Last March, MLRC said it was giving itself until September this year to finalize talks with government and potential investors in the plush Mimosa Leisure Estate at the Clark Special Economic Zone for approval by their stockholders.
MLRC, which is into leisure and gaming, operates the Mimosa Leisure Estate which features, among others, a 36-hole championship golf course, a 304-room five-star hotel, various de-luxe furnished villas, and a gaming casino.
Since December 1999, however, the government, through CDC has taken over the management and operations of the said property after securing a favorable court order over its dispute with MLRC’s non-payment of tax and rental fees worth about P325 million, as well as reported violations of several terms and conditions of the lease contract.
Although MLRC has filed a countersuit still pending with the courts, it has been in active negotiations with CDC for the resolution of the rental issues, a principal component of which is the entry of new investors to bring in fresh equity into MLRC to settle its government obligations and restructture its P7-billion debts owed to a consortium of bank creditors.