By Neil Jerome Morales (The Philippine Star) | Updated September 14, 2013 - 12:00am
MANILA, Philippines - Razon-led Bloomberry Resorts Corp., the owner of the $1.2-billion Solaire Resort and Casino, has sacked its casino manager and a key executive for breach of contract.
The management shakeup came just six months since the opening of the casino complex, whose revenues have yet to catch up with high operating expenses.
Bloomberry and its operating subsidiaries Sureste Properties Inc. and Bloomberry Resorts and Hotels Inc. said they “have terminated the management service agreement (MSA) with Global Gaming Philippines LLC (GGAM) because of material breach of the MSA by GGAM.”
“GGAM has not spent any material time in attending to the management of Solaire and has failed to perform its obligations and deliveries under the MSA,” Bloomberry said in a disclosure.
Bloomberry said it is eyeing an experienced casino hotel executive to replace Solaire chief operating officer Michael French, the official representative of GGAM.
Following the shakeup, Bloomberry said Solaire will be operated by several members of the existing management team “that are very capable.”
For its part, GGAM said it did not violate the agreement with Bloomberry.
“Bloomberry’s assertions regarding GGAM’s performance of its obligations under the MSA have no factual or legal validity,” the casino manager said in a statement.
“Bloomberry has materially breached that agreement and GGAM is pursuing its rights under that contract in arbitration in Singapore,” it added.
GGAM is led by three principals who each have decades of integrated tourism resort and gaming industry experience, a substantial portion of which were in senior management positions with Las Vegas Sands in the US and Macau.
Late last year, GGAM exercised its option to acquire 921.18 million Bloomberry shares at a sharp discount. The purchase of an 8.7-percent stake, which allowed GGAM to become the second-biggest shareholder of Solaire, aligned the interest of GGAM with those of the owners of Solaire.
The $750-million Phase 1 of Solaire, which offers 500-rooms, 18,500 square meters of gaming space and 15 luxurious dining options, started commercial operations on Mar. 16.
For the first half, Bloomberry posted a net loss of P1.03 billion, deeper than the P260-million loss in the same period last year.
In the second quarter, Bloomberry recorded P22.7 million in profits on the back of P3.59 billion in revenues. However, revenues have yet to catch up with high operating expenses, which hit P3.65 billion in the second quarter.
Bloomberry is spending $450 million for the Phase 1A expansion that will allow the company to open a 300 all-suite hotel, 3,900 parking slots, a shopping center with luxury brand stores and an entertainment theater by next year.
The casino hotel is situated in Entertainment City, a 120-hectare property reclaimed from Manila Bay and owned by the Philippine Amusement and Gaming Corp. (Pagcor).