GGRAsia – LRW undecided on US$31.2-mln preferred shares deal

LRW undecided on US$31.2-mln preferred shares deal

Jan 22, 2019 Newsdesk Latest News, Philippines, Top of the deck

The management of Philippine gaming company Leisure and Resorts World Corp (LRW) has not yet decided if it will redeem perpetual preferred shares worth about PHP1.65 billion (US$31.2 million). In a note to the Philippine Securities and Exchange Commission on Friday, Leisure and Resorts World said it had the option – but no obligation – to redeem the preferred shares in whole or in part on the fifth anniversary of the date of their issue.

Between May and September 2013, the investor with interests in land-based and online gaming issued perpetual preferred shares to a maximum of 19 buyers. The preferred shares have a par value of PHP1 each and an issue price of PHP1 a share.

They are cumulative, non-voting and non-participating stock that pay dividends indefinitely and may otherwise be traded as common stock. The company acknowledges that it may have to pay a higher dividend rate if the preferred shares are not redeemed.

“Unless the preferred shares are redeemed by the company on the optional redemption date, the dividend rate shall be adjusted on the optional redemption date to the higher of (a) the dividend rate or (b) the prevailing Philippine Dealing System treasury-note-fixing 10-year treasury securities benchmark rate plus a spread of 300 basis points,” the company told the SEC.

“The company will continue to pay dividends as soon as the proceeds of the private placement is [sic] received,” it said. “Rest assured that the deferred declaration will not affect investor earnings.”

Leisure and Resorts World made a net profit of PHP430.3 million in 2017 on gross revenue of PHP14.94 billion. In June, it declared a cash dividend of PHP0.0425 per preferred share.

Among the businesses run by Leisure and Resorts World are a subsidiary that controls the Midas Hotel and Casino in Manila, and another which operates slot-machine arcades across the country. Another business, the Cagayan Leisure and Resort Corp, known as First Cagayan, is an online gaming licensor in the Cagayan Freeport and Special Economic Zone in the northeast of Luzon, the main island of the Philippine archipelago. And until 2017, Leisure and Resorts World had a revenue-sharing deal with Belle Corp, an investor in the City of Dreams Manila casino resort.

Macau casino operator Galaxy Entertainment Group Ltd announced in December 2017 that, in partnership with Leisure and Resorts World, it would invest up to US$500 million in building a casino on the Philippine beach resort island of Boracay. An aide to Philippine President Rodrigo Duterte later said Mr Duterte was opposed to allowing a new casino on Boracay.