Universal Entertainment has lost one Philippine partner and has fired another, adding to a list of unresolved issues needing to be addressed ahead of the opening of its US$2 billion resort at Entertainment City
Kazuo Okada has scrapped an agreement with Century Properties Group under which the Philippine company was to invest in the US$2 billion resort the Japanese tycoon is licensed to develop at Entertainment City on Manila Bay.
Century has fired back with a lawsuit. The company is asking a local court to void the termination, which Universal ordered after a second local partner, First Paramount Holdings 888, withdrew from the venture. Century also has sent a notice of dispute to Tokyo-based Universal and its Philippine subsidiaries challenging the validity of the move.
The partnerships were designed to resolve charges that Universal was evading compliance with laws restricting foreign ownership of land to no more than 40%. In 2012, the Philippine Justice Department issued a legal opinion indicating the ownership structure of Eagle I Landholdings, Universal’s local affiliate, may have breached those laws because Aruze USA, Universal’s US-based machine gaming supplier, effectively held 64% of Eagle I in the form of direct and indirect stakes.
Century had agreed to acquire 36% of Eagle I as part of a deal that calls for Century to develop five hectares of the Entertainment City site. First Paramount had agreed to buy 24%.
In contesting the termination, Century says First Paramount’s withdrawal does not nullify its deal because other qualified Filipino companies could be found to replace it. Century also alleges that Universal wanted changes in their agreement that would have eliminated its exclusive right to develop the luxury commercial and residential portions of the project, Manila Bay Resorts, as it’s called which is scheduled for completion in the first quarter of 2015 and will feature 2,000 rooms, substantial gaming facilities and an indoor beach under a massive glass dome. Construction is reported to be proceeding, but the government says Mr Okada and his companies need to resolve the partnership issue if they want to retain the license there.
It’s not the only hurdle Mr Okada faces in the Philippines. His group also is under investigation by the US Justice Department and the Philippines’ National Bureau of Investigation on suspicions first reported by Reuters late in 2012 that bribes were paid to secure preferential treatment for Eagle I. Universal and Okada have denied those allegations and are suing Reuters in Tokyo for defamation. Universal maintains that it conducts all its business in the Philippines lawfully.
In a recent interview with the Philippine Star, Cristino Naguiat, head of the Philippine Amusement and Gaming Corporation, the goverment agency that licenses and regulates gaming in the country, said, “They need to open by 2015. That’s what they committed to us. But let me emphasize that they cannot open the casino unless they have addressed all issues, such as the allegations of bribery and the land ownership requirement.” He added, “And if they don’t meet their commitment, do we cancel it? And if they request for extension, do we approve it? These are some of the things we need to discuss with our lawyers.”
He said, however, that he is optimistic.
“Construction remains ongoing so we won’t write them any letter yet, but once they stop construction we will step in and ask them to explain. I believe they’re still serious in doing business here. They’ve already spent more than $200 to $300 million for the project. I think they will do everything they can to resolve all pending issues. From what I heard, they already have about 4,000 workers.”
