Gaming firm exercises equity option, takes 8.7% in Bloomberry
MANILA, Philippines - Global Gaming Asset Management (GGAM), the operator of the flagship casino project of Bloomberry Resorts Corp. in Entertainment City Manila, is set to exercise an earlier signed equity option that will give it about 8.7 percent of Bloomberry. The transaction will make GGAM the second-biggest shareholder of Bloomberry after owner Enrique Razon Jr.
GGAM president Bradley Stone told reporters last week that the investment was “definite” given that Bloomberry is trading near record highs since a follow-on share sale in May and GGAM locked in a good deal for the stake.
Bloomberry said in an April 26 disclosure that an equity option agreement was signed between controlling stockholder Prime Metroline Holdings and GGAM unit Global Gaming Philippines Llc. that will allow GGAM to acquire up to 921.18 million Bloomberry shares at P1 per share plus $15 million, assuming the option is fully exercised.
GGAM, which is led by veteran casino executives from Las Vegas and Macau, can exercise the option until Bloomberry’s project, Solaire Resort and Casino, starts commercial operations in March 2013.
With Bloomberry valued at P13.20 per share on Friday, that equity option allows GGAM to acquire its shares at an 87-percent discount. Equity options like these are not unusual and are meant to align the goals of the operating partner with that of the majority owners.
“The bottom line is that it’s a very wonderful investment—let there be no question that it will be exercised,” Stone said. Based on its original agreement, GGAM’s option was equivalent to a 9.91-percent stake in Bloomberry prior to latter’s issuance of shares during its follow-on offering.
Bloomberry has been a clear market favorite in recent weeks, having gained about 18 percent so far this month.
The stock is currently trading at a 76 premium over the P7.50 per offer price sold to investors during its follow-on share sale in May reflecting optimism on the prospects of the country’s gaming sector.
What will open in March is the first phase of Solaire, which involved investments of $750 million comprising 500 hotel rooms, an 18,500-square meter (sq.m.) casino (with includes 6,000 sq.m. of gaming salons), 15 dining options and four restaurants.
Entertainment City is seen as a key driver in drawing more international tourists in the country. The government is targeting to attract 10 million international tourists by 2016, from 3.5 million last year and a projected 4.6 million this year.
Blooberry held a follow-on share sale in May valued at P9.7 billion and mostly sold offshore to help finance the construction of Solaire, which will be the first casino to open in Entertainment City. There are three other licensees—Belle Corp., Travellers International Hotel Group Inc. and Universal Entertainment.