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Casino expansion under way

Posted on July 18, 2013 10:48:26 PM [ BusinessWorld Online ]
THE DELAY in the initial public offering (IPO) planned by Travellers International Hotel Group, Inc. will not affect the ongoing multimillion-dollar expansion of Resorts World Manila, a top company official said yesterday.
RESORTS WORLD MANILA’s $600-million expansion can be funded by sources other than the planned initial public offering, a top company official said.
“We are not pressured. We have funds available to fund our projects,” Travellers President Kingson U. Sian told reporters following the annual stockholders’ meeting in Quezon City of Megaworld Corp., a sister company where he is director.
Mr. Sian said Travellers has around P36 billion in cash to bankroll the expansion, which according to him, was worth “around $600 million.”
Travellers early this month told the Philippine Stock Exchange that it was putting off its planned IPO “in view of the current market conditions.”
“We will wait for the right time to do it (IPO),” he said yesterday.
“[It could be] in September, October November, December -- if at all.
We are ready because we have done the paperwork already.”
The company planned to offer up to 1.57 billion shares at “up to P23.38” apiece with an additional 235.98 million for the overallotment option.
Proceeds of the IPO was intended to fund the expansion Resorts World Manila in Pasay City, the firm’s flagship property development.
The IPO was supposed to take place this month, but the company decided to defer the share sale amid market volatility arising from uncertainty over when the US Federal Reserve will start to scale back its massive bond-buying monthly stimulus.
Once the company will have been listed, Mr. Sian said Travellers -- a joint venture between Alliance Global Group, Inc. and Genting Hong Kong Ltd. -- will conduct a “secondary offering,” but declined to provide details.
Mr. Sian said the company may also borrow to fund the expansion .
“We can go to the debt market or we can actually use bank lines,” Mr. Sian said, noting that the company has a $300-million unused credit facility.
He said his company is on track to complete at the Resorts World complex a 4,000-seater convention center next year, the 200-room expansion of Manila Marriott Hotel in 2015, as well as opening of Hilton and Sheraton hotels in 2016 -- all in the Resorts World complex.
The expansion is expected to add 1,100 rooms to Resorts World Manila’s existing 1,200.
Also yesterday, a Megaworld statement quoted its Chairman Andrew L. Tan as saying the property developer will likely hit this year’s target for reservation sales.
“Based on our performance, we are well on track to hit our target of P70 billion in reservation sales for the year 2013,” said Mr. Tan, who is also chairman and chief executive officer of parent conglomerate Alliance Global.
Mr. Sian, who is also Alliance Global president and chief operating officer, said Megaworld’s projected sales this year are 10.24% more than the P63.5 billion actually earned last year.

“The group will launch 25 projects this year -- 14 of the projects were already launched in the first half,” Mr. Sian said, defining “launching” as the point the company started selling units.
The 25 projects are equivalent to around 12,000 units, more than the 20 projects or 10,000 units launched last year, he explained.
The company also expects rental income to double in the next five years, Mr. Sian said.
“We had 500,000 square meters of office space as of last year. We plan to double our rental income from P5 billion last year to P10 billion in the next five years,” he said, explaining this would also entail doubling of office spaces.
Alliance Global booked a net profit of P4.91 billion in the first quarter, 18.31% more than the P4.15 billion in the same period last year.
In the same comparative periods, Megaworld’s net profit grew 15.19% to P1.82 billion from P1.58 billion.
Yesterday, shares of Alliance Global gained 20 centavos or 0.81% to close at P24.80 apiece yesterday from P24.60 on Wednesday, while those of Megaworld added nine centavos or 2.71% to P3.41 each from P3.32. -- Cliff Harvey C. Venzon      

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