EEI takes a crack at PH Resorts

EEI Corp.

Despite three investors backing out from the same deal, PH Resorts Group Holdings Inc. (PHR) has again enlisted another company to complete its long-stalled Emerald Bay Resort and Casino project in Cebu province.

This time, Davao-based businessman Dennis Uy is tapping the Yuchengco family through EEI Corp. for the $300-million project that has yet to be completed since construction began in 2017.

PHR on Monday said its parent firm, Udenna Corp., had signed a memorandum of understanding (MOU) with EEI, although it is still unclear what the latter will get in exchange for its investment.

The MOU will allow EEI to execute agreements with PHR and its subsidiaries, Lapulapu Leisure Inc. and Lapulapu Land Corp., to “finance, construct and complete” the project, PHR said in a stock exchange filing.

PHR’s share price plunged by 20.25 percent to P0.63 each on Monday as investors absorbed the news.

“PHR will make the necessary disclosures at the appropriate time when the deal terms are finalized and the definitive agreements are executed,” it added.

Given the initial terms of the deal, Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., pointed out that PHR may “probably be left with a minor economic stake” in the project while EEI may end up taking control.

“Naturally, one of the questions in the minds of public shareholders is whether this MOU will see the light of day, as attempts to do a deal with previous suitors all fell through,” Colet added.

EEI is the fourth investor to take a risk on the Cebu project that was previously tagged as overpriced by analysts. In July, Tiger Resort Leisure and Entertainment Inc. (TRLEI), the operator of Okada Manila, backed out from the deal that would have finally nudged the Emerald project toward completion.

TRLEI’s exit followed those of Cebu-based developer AppleOne Properties Inc. and tycoon Enrique Razon Jr.-led Bloomberry Resorts Corp., both in 2023.

Alfred Benjamin Garcia, research head at AP Securities Inc., noted it was “too early to be excited about any prospects for PHR given its history of failed deals.”

“For example, the disclosure stated that EEI will finance, construct, and complete the project but it is unclear what they will get in exchange: ownership stake, or eventual payment?” Garcia said in a Viber message.

PHR promised that the project will be an integrated resort with a five-star hotel, two 15-story towers with 642 rooms, four pools, 18 food and beverage outlets, retail spaces, conference and exhibition facilities, and a gaming floor with at least 700 electronic gaming machines and more than 140 tables.

PHR narrowed its net loss in the first nine months of the year by 82 percent to P392.95 million. This was due to lower interest expense and recognition of other income from the reclassification of nonrefundable payments from TRLEI, it said.