Failure to settle its remaining escrow has caused the demise of another casino in the Clark Freeport Zone in the Philippines, local media has reported.
State regulator Philippine Amusement and Gaming Corporation (PAGCOR) reportedly ordered the closure of Casablanca Casino at the Stotsenberg Hotel last week because its new operators failed to settle the remaining escrow amount of PHP255 million (USD5.13 million).
PAGCOR Chairman Andrea Domingo was quoted by SunStarsaying, “After several extension, they were not able to meet the escrow requirements.”
The shutdown has left close to 200 workers without jobs, according to the report. Stotsenberg Hotel, however, is still operating normally.
Stotsenberg Hotel and Casablanca Casino was acquired by Australia-listed Frontier Capital Group Limited in 2015 for $226 million in shares to be transferred in three tranches. Frontier Capital Group initially targeted to complete the acquisition by January 2016.
Banking on the Philippine government’s plans to improve the road network and increase flights at the Clark International Airport, Frontier Capital Group had high hopes for the casino, which is located less than two kilometers away from the Clark airport.
In November 2015, Frontier Capital forecast a doubling of profit by 2018—to $11.7 million from $5 million 2016—as a result of its “aggressive expansion plans” for the Clark casino. Casablanca Casino has a total of 190 slot machines, 36 gaming tables and two VIP rooms, while the Stotsenberg Hotel has 239 hotel rooms and a convention center that can accommodate a maximum of 2,000 people.
Under the acquisition deal, Frontier Capital is entitled to a five-year profit guarantee of $5 million per annum, while its local partner, E!xciteGaming and Entertainment Inc., expects to get 142.2 million shares of FCG in tranches linked to the profit guarantee. The casino investor said it expects to reach at least $25 million in aggregate profit within the casino’s first three years of full operation.