October 06, 2014

RWM acquires 95% of RWBCI

In a disclosure yesterday, Travellers International Hotel Group Inc (RWM) said it has acquired 880m common shares and 2.35b preferred shares of Resorts World Bayshore City Inc (RWBCI). This brings RWM’s stake in RWBCI at 95%. RWBCI is the developer and operator of Bayshore City Resorts World, which is the group’s second casino site that will be located in PAGCOR’s Entertainment City. RWM said it has paid P4.038b out of the P16.15b subscription amount. The balance will be paid upon call by RWBCI’s board and upon approval by the SEC of RWBI’s application for a capital hike.

Bayshore City Resorts World has commenced site development while the actual construction and development is slated for the next two months. The facility is set for opening by 4Q18. Aside from the gaming facility, it will initially have at least 1,500 hotel rooms to be managed by international brands such as Westin, Hotel Okura, and Genting’s own brand.

Our take: RWM has yet disclose its financing plans for settling the remaining portion of the acquisition as well as the US$1.1b expected investments for the development of Resorts World Bayshore. At any rate, the acquisition should bode well for RWM which has been weighed by poor results arising from low win rate and tougher competition in its gaming operations.

RWM’s share price has also come under pressure on market disappointments that the Bayshore project was not part of the assets covered by theinitial public offering proceeds. The market also took negatively the prolonged uncertainties regarding the opening of the project. Thus, this announcement can help boost market sentiment on RWM.

However, we take note that the Bayshore project will open by 2018 with greater challenges as it will be facing tougher competition from Bloomberry Resorts Corp’s (BLOOM) Solaire facility and Melco Crown Phils Inc’s (MCP) City of Dreams which should have well-established operations by 2018. – WealthSec