DigiPlus bets on physical casino via P12-B deal

Online gaming giant DigiPlus Interactive Corp. (DigiPlus) is diversifying its business with a P12-billion investment to corner a stake in a Hong Kong-listed firm that operates New Coast integrated hotel and casino complex in Manila.

The company told the local bourse on Tuesday that it had signed a convertible notes agreement, giving it the right to take over a controlling economic stake in International Entertainment Corp. (IEC).

The convertible notes will be issued in two tranches, split into HK $800 million (P6 billion) each.

If DigiPlus decides to convert the notes with an initial conversion price of HK 1 (P7.59) per share, the group can secure 53.89 percent of IEC’s issued capital stock.

On the other hand, if it opts not to, the notes will be redeemable at 108 percent after a five-year maturity. The notes carry an interest rate of 3 percent per year.

“The acquisition will strengthen DigiPlus’ omnipresent entertainment ecosystem by adding a strategic offline platform that seamlessly connects with its digital network,” said the group. DigiPlus is also behind BingoPlus, ArenaPlus and GameZone.

IEC holds a provisional license from the Philippine Amusement and Gaming Corp. (Pagcor) to operate the casino at New Coast Hotel. The casino was previously operated by Pagcor, which is now slowly shifting to a purely regulatory role.

The move still needs approval from the Securities and Futures Commission of Hong Kong and the Stock Exchange of Hong Kong.

Both parties also have to get the go-signal from the country’s competition watchdog for the conversion of notes.

Earlier this month, DigiPlus reported a consolidated net income of P10.11 billion in the first nine months, a 16-percent expansion driven by its retail games segment. New product offerings and operational efficiencies boosted earnings.

However, the group started to take a beating from stricter rules on online gambling, with its third-quarter profit dropping 59 percent to P1.71 billion.

This, as e-wallet firms were ordered to cut ties with online gambling sites.

The proliferation of online gambling had triggered a series of criticisms from the Catholic Church and some lawmakers, as they warned about addiction and possible financial ruin.

The new rule, the gaming firm earlier noted, disrupted player activity and transaction volumes across the industry.