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Frederic C. Dybuncio
Macau-based Melco Resorts & Entertainment Ltd. is talking to about two prospective buyers or investors for its City of Dreams Manila integrated resort, which it is operating using the property of Belle Corp. and the license of Premium Leisure Corp., both of the SM Group.
“At the moment, as far as I know, there are one or two who have expressed interest in looking at the property. But so far, nothing definite has happened yet,” SM Investments Corp.’s President and CEO, Frederic C. Dybuncio, said in a press briefing for SMIC’s first half performance.
He noted, though, that “I don't know whether they're operators or just private equity that might want to invest and let Melco manage the casino. I'm not privy to that discussion... But, if they cannot sell it at the price they want, they should continue the business.”
Melco announced earlier this year that it is “evaluating potential strategic alternatives” in relation to City of Dreams Manila. Its subsidiary Melco Resorts Leisure (PHP) Corp. manages and operates City of Dreams Manila pursuant to an operating agreement entered into by, among others, Melco Resorts Leisure, certain other subsidiaries of Melco, PremiumLeisure, and Amusement, Inc.
Melco said it has retained CBRE Capital Advisors, Inc., and Moelis & Co. LLC as financial advisors to assist in the process of exploring potential strategic alternatives for City of Dreams Manila.
Meanwhile, DyBuncio said they are also considering venturing into the online gaming business using the Philippine Inland Gaming Operators license that came with the gaming license issued to PLC.
“Right now, we are thinking of setting up our own online gaming. But we put that on a bit of a pause to see what happens to the regulations,” he said.
He noted that, “We do have a PIGO license as part of our physical license. And that's something we're looking at. But we wanted to wait to see first how the regulations will affect us.”
However, DyBuncio said that, “we're hopeful that the regulations will help us, moving forward, and go back to the physical gaming... We're actually number two in mass market compared to Solaire, Okada, and Resorts World. We're also number two in terms of slots for the mass market. We're very, very strong in the mass market, which is very stable in terms of growth.”
He explained that City of Dreams Manila does not have many VIP and junket players since these are not part of the core business of Premium Leisure.
Belle Corporation is the developer of City of Dreams Manila, which is being leased on a long-term basis to Melco. Melco holds an operating agreement with PLC’s wholly owned subsidiary, PremiumLeisure and Amusement, Inc., which holds the casino license.
Aside from lease income, Belle earns gross gaming revenues from City of Dreams Manila through its 99.55 percent ownership in PLC and owns approximately 1.5 hectares of presently undeveloped land from across the site.
“Melco pays us rent on the structure. And then Premium Leisure, who is a co-licensee of the casino, earns based on the EBITDA earnings of City of Dreams. But we don't share any losses.
“So if on a given month, there's a loss in the casino, we don't share in that. We only share if there are any profits in a given month. We do not have any financial risk in the casino. So, the worst that could happen is that we have zero income in a month, but that has never happened,” DyBuncio explained.
