A group of potential investors in the US$1.4-billion casino project on the Philippine island of Cebu has dropped out due to “perceived political risks and other issues in the country”.
A letter filed with the Philippine Stock Exchange stated that while a land deal for Cebu had not been concluded, the project’s co-ordinator was still hopeful of finding other investors, and was now also looking at acquiring land in alternative locations. The letter suggested that they were looking to relocate the project to the capital city of Manila, although this would likely mean higher costs.
The letter was in response to a request made by an investor in the land portion of the scheme – Calata Corp, a listed agricultural products firm – who required an update on the co-ordinators plans to open the casino by the end of 2020.
Calata previously stated that a partnership with two other entities – Sino-America Gaming Investment Group LLC and Macau Resources Group Ltd – would aim to establish a real estate investment trust for the project, a venture to be called Mactan Leisure City. However, talks of a partnership between these individual firms and another group of foreign investors abruptly ended.
Michael Foxman, Chief Executive of RiskWise Global Capital Group LLC, crafted the response letter to Calata. RiskWise has been arranging the “real estate development, project planning, financing, construction and ongoing activities” for the land on behalf of Calata Land Inc..
Foxman’s letter states: “We have been working with a particular group of foreign investors for the past 12 months to close this deal. However, due to their perceived political risks and other issues in the country, they have decided to retract their commitment to proceed.”
The document further states: “As with many foreign companies who had been working feverishly to undertake projects in the Philippines during 2016, we have experienced investor backlash as a result of political and social issues. These issues now having settled down, will enable us to renavigate foreign investor sentiment with the view that we can conclude our business aspirations, as initially planned, however, late.”
No further details were provided on the aforementioned “political and social issues” in Foxman’s letter.
However, the letter states: “These underlying issues were beyond the control or influence of Calata, Sino[-America], [and] MRG. We would like to report however that we are now working diligently to create a commitment with another group that wishes to participate in this US$1.4-billion project.”
The inquiry from the disclosure office had also requested information about whether there was progress on a land deal for the project, which has been overdue since September 2016.
Foxman responds: “Unfortunately, due to external factors, these timelines [could not]… be met. We feel we are about nine months behind schedule. However, we must note that our intentions with Calata are not limited to only one project site and that we continue to work with Calata and land owners to secure other sites.”
The exchange’s inquiry also asked about the infusion of funds for the project, expected to start in “the third week of September 2016 [to] be completed by January 2017”.
Foxman’s letter states: “We anticipate that our financial commitment into Calata will be achieved in accordance with our revised schedule and with this said, we anticipate formalising agreements with our new investment partner by May-June 2017…”
“We are currently working on securing several sites in Manila and other areas and these too will be incorporated into the transaction. The nature of these acquisitions will cause a different commitment sum to Calata, however this is contemplated to be more than the originally proposed sum. This business activity is still ongoing and a definitive quantum is not yet available.”