Leisure and Resorts World Corp (LRWC) is taking on fresh debt to fund its takeover of the biggest operator of state-run Philippine Amusement and Gaming Corp's (Pagcor) e-Games outlets.
In an interview, LRWC head of investor relations Freddie Reyes said the leisure and gaming company is in talks with 3 to 4 banks to raise P400 million to P500 million.
The proceeds of would help finance the P620-million acquisition of Digiwave Solutions Inc. LRWC expects to raise the funds within the month or early August, around the same time when the company closes the deal to buy Digiwave.
However, a disclosure to the Philippine Stock Exchange showed that Premier Horizon Alliance Corp (PHA), which owns 85 percent of Digiwave, transferred the latter's assets, including all the operating Pagcor e-Games stations, to the wholly owned unit Total Gamezone Xtreme Inc (TGXI).
Likewise, PHA and the minority shareholders of Digiwave have agreed to enter into a share purchase agreement with LRWC for the sale of 100 percent of TGXI following the completion of the due diligence.
"Closing it is not an issue," Reyes said. Aside from the bank borrowing, LRWC will also tap its existing credit lines or internally generated funds to fund the purchase of Digiwave.
The listed firm can pay the down payment and stretch out the balance over a certain period of time as Digiwave completes the turnover of the units to LRWC, Reyes said. Digiwave is required to deliver the e-Games stations to LRWC on or before the closing date to be agreed upon by both parties.
Digiwave is the market leader in operating Pagcor E-Games outlets in Metro Manila and nearby provinces.
In May, LRWC offered to acquire 100 percent of the outstanding capital stock of Digiwave, which is 85-percent owned by PHA.
LRWC's move to secure funding from the banks came on the heels of a plan to put on hold a P250-million preferred share sale early this year.
"We pushed back the sale of 250 million preferred shares because we felt that given the environment, the 8.5 percent coupon rate was a little bit high and that we could do better by going to banks directly. True enough, we're being offered better rates by the banks," Reyes said.
LRWC runs gaming operations through AB Leisure Exponent Inc -- which operates the professional bingo gaming through Bingo Bonanza Corp -- and First Cagayan Leisure and Resort Corp -- which operates and conducts internet and gaming enterprises and facilities in the Cagayan Special Economic Zone Freeport.
LRWC took over Midas Hotel in November 2012. The company also secured a stake in the government’s Entertainment City project after providing Henry Sy-led Belle Corp some P4 billion in funding for the $1.2-billion City of Dreams Manila, set to open in the fourth quarter of the year.
-Interaksyon
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