Building a new casino is never an easy, or inexpensive feat. Developers seek out millions – sometimes billions – of dollars to make their dreams come true. In some cases, they can also go deeper in debt to see the projects realized. That is the path Universal Entertainment has chosen for its Okada Manila casino resort, for which it will conduct a private placement of $600 million to help pay for continued construction.
The resort first opened in December 2016. It has undergone a series of facelifts since then to add additional features that have led it to be able to brag of $50.6 million in gross gaming revenue (GGR) this past October.
The private placement of notes to cover the funds has already taken place, according to a filing Universal sent to the JASDAQ (Japanese Association of Securities Dealers Automated Quotation). It added that the notes themselves will be issued today, and that each carries a price of $0.99 on the principle. The debt is expected to mature on December 11, 2021 and has an annual coupon of 8.5%. The placement was overseen by Union Gaming Securities.
The net proceeds from the placement will be used to cover the construction costs at Okada Manila, for general corporate purposes and to repay a loan provided by Tiger Resorts Asia, a subsidiary that also runs Okada Manila.
The company said earlier this month that it has not yet implemented a share buy-back program that it first announced in October. Universal is expected to buy back 600,000 shares of common stock, which is about 0.75% of its outstanding shares. In exchange, it will pay around $17.6 million and the buy-back program was expected to start on October 15 and terminate on December 28.
Okada Manila is expected to become one of the biggest attractions in the Philippines. Fitch has given it a B+ rating because of its “strong market position” and continued growth. However, an ongoing feud with Universal’s former chairman, Kazuo Okada, is causing difficulties that the company still cannot overcome. Kazuo Okada has been fighting to take back control of the company since being ousted last year over concerns that he had misused company funds for his own personal gain.