Calata fails to close deal with new investors for Mactan Leisure City
LISTED agribusiness Calata Corp. is facing delays in advancing its partnership with two foreign casino investors for the planned Mactan Leisure City, as perceived political risks and other issues kept prospective funders from committing to the project.
In a letter to the stock exchange on Wednesday, management consultancy RiskWise Global Capital Group, LLC said its client Calata along with Sino-America Gaming Investment Group, LLC and Macau Resources Group Limited (MRG) failed to close a deal with another group of foreign investors.
“We have been working with a particular group of foreign investors for the past twelve 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,” RiskWise noted.
“These underlying issues were beyond the control or influence of Calata, Sino 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 $1.4-billion project,” it added.
The partnership targets to secure the group’s commitment by May and expects capital commitments taking place within weeks from the contract signing. We contemplate a settlement of the purchase of CAL shares at the agreed price on or about June 2017.
Calata announced as early as August 2016 its partnership with Sino and MRG for the construction and operation of Mactan Leisure City, an integrated resort and casino envisioned to rise within a 14-hectare property in Cebu.
The partnership had planned to establish in September 2016 a corporate vehicle called Calata Land, Inc., which will eventually list on the Philippine Stock Exchange as a real estate investment trust and count Mactan Leisure City among its properties.
Alongside, Sino and MRG had looked to register and incorporate their equity interests in a local company called Mactan Leisure City Management Corp. upon determining a casino operating partner. The new entity will enter into a lease agreement with Calata Land.
“Unfortunately, due to external factors, these timelines were not able to be met. We feel we are about nine months behind schedule,” RiskWise said.
“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. In this regard, this is a real estate business and nothing ever will happen perfectly and simply, particularly at the level we are working at,” it added.
Mactan Leisure City will have three hotels, including what could be Southeast Asia’s first seven-star hotel; a casino and entertainment complex; commercial, retail and conference facilities; and a yacht club.
Sino and MRG had intended to start developing Mactan Leisure City in January and expected to secure a license from the Philippine Amusement and Gaming Corp. to operate a casino within the property by the latter part of the year.
The investment group from the United States and the gaming operator from Macau had committed to invest around P836.1 million initially. Of the amount, P234 million will be infused to Calata and the remaining P602.1 million directly to the corporate vehicle, where the Philippine-listed firm will maintain a 51% stake.
“We anticipate that our financial commitment into Calata will be achieved in accordance with our revised schedule and with this said, we anticipate formalizing agreements with our new investment partner by May-June 2017 and immediately thereof we shall undertake our commitments,” RiskWise said.
Despite the setback encountered by the partnership, Calata have supposedly seen no unfavorable impact on its business or financial condition. In the equities market, however, the company’s shares fell seven centavos or 3.03% to P2.24 apiece on Wednesday to extend their downtrend since August 2016.
“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,” RiskWise said.
“These issues now having settled down will enable us to re-navigate foreign investor sentiment with the view that we can conclude our business aspirations, as initially planned, however, late. It’s unfortunate, however, a reality that we must work through.” —