Tycoons Sy, Packer, Ho team up for casino in Manila

By Farah Master and Erik dela Cruz, Reuters

Posted at Jul 06 2012 09:31 AM | Updated as of Jul 06 2012 10:31 PM

Deal brings together Macau's Melco, Philippine's Belle

HONG KONG/MANILA - Macau casino Melco Crown and Philippine leisure firm Belle Corp signed a conditional deal to develop a $1 billion casino-hotel that will see some of Asia's biggest tycoons team up in Manila, touted as a promising new gambling market.

Melco, owned by Australian billionaire James Packer and Hong Kong businessman Lawrence Ho, will join forces with the Philippines' wealthiest man, Henry Sy, who controls Belle to jointly develop and manage the hotel set to rise in a more than 100-hectare gaming complex.

The companies said on Thursday an agreement was set to be finalised within the next two months.

Melco will invest no more than $580 million using cash, cash flow and debt financing to help fund the casino resort, the company said in a statement.

A loan facility of $320 million may also be made available to help finance the project, Melco said.

It will be the first time for Melco to venture into the Philippines as it has focused on Macau, the world's top gambling market, where it is waiting final approval to build a casino resort.

The $12 billion company is one of six licensed operators in Macau where the pace of casino expansion is tightly controlled by the government.

"The expansion into new jurisdictions where the company expects strong returns on capital will further diversify the company's exposure in Asia," Melco said.

Macau's gambling revenue growth has dropped significantly in the past two months, hitting a near 3-year low in May while June's figure was weaker than expected. 

Analysts are optimistic on the Philippines' future growth despite a broader slowdown in the global economy. Locals are legally allowed to gamble in the Philippines, creating a much larger pool of customers than in markets such as Vietnam where casino gambling is restricted to foreign passport holders.

CLSA predicts gambling revenue in the Philippines will grow from US$1.3 billion in 2011 to US$3 billion in 2015 once three new resorts are completed.

MANILA, VIETNAM, AUSTRALIA

Casino expansion across Asia is mushrooming with Vietnam also due to open a new casino resort in 2013 and markets such as Taiwan and South Korea consider legalising gambling.

James Packer's Australian casino group Crown Ltd and Southeast Asia's largest gambling group Genting  have both been raising their stakes in Sydney casino operator Echo Entertainment.

Belle plans to build an integrated entertainment resort complex called Belle Grande Manila Bay, which features a 30,000-square-metre casino in a developing gaming and retail destination known as Entertainment City in Manila.

Three other casino licensees are set to operate in the sprawling gaming area by the Manila Bay, a project of state regulator Philippine Amusement & Gaming Corp, or Pagcor.

The biggest of the four projects is a $2 billion casino-hotel complex being built by a unit of Japan's Universal Entertainment Corp  set for completion in 2014.

The two other developers are Bloomberry Resorts Corp of Filipino billionaire Enrique Razon and the joint venture between Genting Hong Kong Ltd and Alliance Global Group  .

Bloomberry has hired Las Vegas-based Global Gaming Asset Management to operate its $1 billion Solaire Manila casino-hotel complex, construction of which will be completed next year.