DigiPlus Interactive Corp will enter the Philippines’ land-based casino business after striking a deal to claim a controlling stake in International Entertainment Corp (IEC) – the parent company of New Coast Hotel Manila.
IEC revealed by way of a late night filing that it had entered into a Subscription Agreement through which DigiPlus will subscribe to notes in an aggregate amount of HK$1.6 billion (US$206 million). Upon full conversion of the notes, DigiPlus will hold a controlling 53.89% stake in IEC based on the enlarged issue.
According to IEC, while conversion would trigger an obligation for DigiPlus to make a mandatory general offer for all general shares it does not already own, the company plans to apply to Hong Kong’s Securities and Exchange Commission for a Whitewash Waiver which would, if granted, be put to shareholders at an Extraordinary General Meeting.
Should the Whitewash Waiver not be granted or approved, DigiPlus will have the opportunity to determine whether it wishes to proceed with the subscription and therefore the mandatory offer to acquire all shares.
The Subscription Agreements follows recent rumors that DigiPlus was looking at acquiring a land-based casino in order to provide greater diversification to its business given regulatory uncertainty around the online space. DigiPlus, controlled by Eusebio Tanco, currently runs leading Philippine online bingo platform BingoPlus, sportsbook ArenaPlus and growing casual and arcade gaming platform GameZone, and is in the process of expanding into the Brazil and South Africa iGaming markets.
IEC, meanwhile, is in the process of transforming its New Coast Hotel Manila hotel and casino into a fully-fledged integrated resort as per a provisional license issued by PAGCOR in 2023. The company has pledged to spend at least US$1 billion to do so, having last year taken over full operational control of its previously PAGCOR-run casino from the regulator.
In Monday night’s filing, IEC noted that the completed IR will include a total gross floor area of at least 250,000 square meters, at least 800 5-star luxury hotel rooms and retail areas of at least 20,000 square meters consisting of casinos, restaurants, leisure facilities and shopping arcades.
It will, therefore, put forward around HK$716 million (US$92 million) of the funds to be raised by way of the Subscription Agreement for working capital that includes the upgrades to New Coast.
“Given that the operation scale in the existing casino and the Hotel is not sufficient to meet the Project requirement, the Group is required to expand the Group’s hotel premises and casino operation as well as to upgrade the hotel, casino and other amenities with the aim to transform to an integrated resort,” IEC said. “Since the grant of the provisional license, part of the Investment Commitment was utilized for the upgrade and improvement of facilities of the Hotel and the Casino.”
The company also revealed that it would utilize HK$489 million (US$63 million) to repay promissory notes and another HK$392 million (US$50 million) to pay back outstanding bank loans.
The Subscription Agreement itself remains subject to shareholder approval.
Outlining the reasons for entering into the agreement, IEC stated, “The Board has considered various ways to raise funds and believe the Subscription to be beneficial to improve and strengthen the Group’s liquidity and financial position on a longer-term basis as the Notes are of a five-year tenor.
“In the event that [DigiPlus) converts part or the full amount of the Notes into the Conversion Shares, it will also broaden the Shareholder and capital base of the Company.”
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