Bloomberry [BLOOM 6.58 6.30%] [link], the gaming arm of Enrique Razon’s diversifying empire, disclosed just before the start of trading that it had signed a term sheet with PH Resorts Group [PHR 1.25 5.30%], the gaming arm of Dennis “Davao Dennis” Uy’s stumbling empire, to invest into various PHR subsidiaries in order to gain a significant stake in PHR’s crown jewel, the Emerald Bay Resort Hotel and Casino in Punta Engano.
The disclosure also mentioned that BLOOM’s investment will give it a stake in another PHR project, the Base Resort Hotel and Casino in Clark in Pampanga, which PHR sought to de-prioritize in order to fund Emerald Bay.
The deal still needs to go through due diligence and gain approval from regulators and creditors before closing.
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There’s a lot to unpack here.
My first reaction was, “Wow, look at EKR go!”, as he has been on an aggressive streak ever since he leveraged Duterte’s attacks against Manila Water [MWC 17.30 1.76%] to take control of that company from the Ayala Family.
But, unlike the MWC move or the news he gained as part of Leandro Leviste’s joint-venture development of the land assets held by Solar Philippines NEC [SPNEC 1.57 1.29%], this move into PHR is about as on-brand as it gets for Mr. Razon.
The Razon Family is already well-established in the local gaming resort industry (BLOOM owns the Solaire Resort & Casino), and this kind of “distressed asset” purchase appears to be something that EKR is quite comfortable with.
My second reaction was, “Wow, look at how much Dennis Uy is struggling!”, since this kind of equity raise was never part of PHR’s (public) plan to fund its casino.
Udenna and Mr. Uy had always bent over backward to maintain Udenna’s ownership stake in PHR, like in August of last year when Udenna completed that top-up transaction where it sold shares to some “qualified buyers”, and used the proceeds to re-buy into PHR to push the proceeds into the company.
Without knowing more, this feels like a situation where BLOOM was able to gobble up some (financially-distressed) prime assets by being in the right place at the right time. I could be wrong.
It’s possible that this kind of stake sale was always part of PHR’s plan, or that BLOOM isn’t rescuing the project and gaining a stake at a cheap valuation, but instead is paying a premium for the right to take part in PHR’s future glory.
That’s totally possible, and we’ll learn more as the parties disclose additional aspects of the deal. I’m just saying that from where I sit, it looks like PHR was just basically running out of money (again) and Udenna/Dennis Uy were running out of options to fund Emerald Bay’s considerable development needs.
Enter EKR.
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