TOKYO (UPDATE) - Japan's Universal Entertainment Corp has terminated a deal under which Century Properties Group Inc was to invest in its casino complex on Manila Bay and develop part of the $2-billion project, the Philippine developer said.
Century Properties said in a statement it would contest a notice of termination received on Wednesday from the "Okada Group", a reference to Tokyo-listed Universal Entertainment and other firms controlled by billionaire gaming magnate Kazuo Okada.
Century officials said the Japanese group sought changes to terms of the agreement that would have eliminated its exclusive rights for the luxury commercial and residential portion of the complex that it had signed on to develop.
"They were proposing something else, they wanted something else," Kristina Garcia, director of investor relations at Century Properties, told a briefing in Manila on Thursday.
Universal had announced investment deals with Century and another Philippine company, First Paramount Holdings 888, Inc in October. Those transactions were aimed in part at addressing allegations that Universal has not been in compliance with a law restricting foreign ownership of land to 40 percent.
Universal has said it conducted its business in the Philippines lawfully. Spokeswoman Akiko Ogasawara said the company was checking into the Century Properties statement and did not immediately have a comment.
Century Properties had agreed to acquire a 36 percent stake in Eagle I Landholdings Inc, a Universal affiliate that owns a plot of land on which the Japanese company is building a gaming, hotel and residential complex called Manila Bay Resorts.
As part of the pact, Century agreed to develop 5 hectares of the site with commercial and residential properties.
Century said it had set aside $12 million for the stake in Eagle 1 and put considerable time into preparing for the transaction. In its statement, it said it was "reviewing its legal options to preserve its rights."
First Paramount Holdings 888, which agreed to buy about 24 percent of Eagle 1, could not be reached for comment.
The issue of shares to the two companies had been designed to place more than 60 percent of Eagle 1 in Philippine hands, a move that would "create a more favourable situation in response to the land ownership requirements," Universal said in October.
In May last year, Universal ended talks with another Philippine developer Robinsons Land Corp over a planned investment deal for the same project.
In 2012, an arm of the Philippine justice department published a legal opinion indicating the ownership structure of Eagle I breached the constitution because Aruze USA, a U.S. firm controlled by Okada, effectively held 64 percent of Eagle I via direct and indirect stakes, above a foreign ownership threshold of 40 percent.
The Philippine Amusement and Gaming Corp (PAGCOR), the industry regulator, has said Universal needs to address the land issue before the casino would be allowed to open.
The U.S. Federal Bureau of Investigation and its Philippine counterpart, the National Bureau of Investigation, have been running separate probes of Okada and his companies on suspicion that bribes were paid to advance Universal's casino project on Manila Bay.
Universal and Okada have denied those allegations and have filed a defamation suit against Reuters in Tokyo over its reporting on $40 million in payments made by the Japanese company to a politically-connected consultant in 2010 around the time it secured key concessions for its planned resort.