For $300M, Razon settles row with ex-Solaire manager
Bloomberry terminated its management contract with GGAM that year, alleging that the latter had breached their management services agreement (MSA). Under their deal, GGAM was supposed to provide technical and other advisory services to the Solaire project during its construction and fit-out stage.GGAM later brought the case for arbitration at the Singaporean Arbitration Tribunal, arguing that it was Bloomberry that had violated their agreement.
The arbitration court in 2016 upheld GGAM’s claim to an 8.7-percent stake in Bloomberry, and pointed out that GGAM had not misled SPI and BRHI into signing the MSA.
It added that the termination of the management deal was “not justified,” as the services rendered by the SPI and BRHI management team “should be considered as services rendered by GGAM under the MSA.”
The amount of settlement agreed upon is close to the amount that Bloomberry would have paid if it did not oppose the monetary award given by the Singaporean arbitration court to GGAM.
Bloomberry had been ordered to pay GGAM $296 million in 2019, a decision that the Razon-led company later appealed. However, Singapore’s Court of Appeal junked its appeal in 2021. INQ
After a decade-long legal battle, Bloomberry Resorts Corp. has ended its dispute with casino management firm Global Gaming Philippines LLC (GGAM), a former management firm of Solaire Resorts & Casino, via a $300-million (P16.8-billion) settlement.
Under the agreement, the company of tycoon Enrique Razon Jr. on Tuesday said Sureste Properties Inc. (SPI) would purchase 921.18 million shares of parent firm Bloomberry at P18.32 per share. This represents 8.1 percent of the total outstanding shares of Bloomberry held by GGAM.
Following the announcement, the resort and casino operator’s shares plunged by 8.7 percent to P10.50 per share on Tuesday as the market priced in the cost of dispute settlement.
The buyout will be consummated through a special block sale at the Philippine Stock Exchange (PSE), according to Bloomberry.
“This settlement will put an end to the dispute of SPI and BRHI (Bloomberry Resorts and Hotels Inc.) with GGAM, which has dragged on for 10 years,” Bloomberry said in its disclosure.
COL Financial analyst Richard Laneda explained that the transaction is not considered a share buyback, and it would be booked as an investment.
Overhang removed
While the purchase of shares would remove the overhang on Bloomberry shares, Laneda pointed out that the transaction may increase interest expenses in the future should the gaming company decide to borrow funds for working capital and other capital expenditure requirements.
“There will be no change in the number of outstanding shares and the transaction will have no impact on the P&L (profit and loss) of [Bloomberry],” Laneda said in a commentary.
As a result, however, public ownership in Bloomberry will drop to 29.07 percent from 37.17 percent, as SPI is a wholly-owned subsidiary. Laneda said this may thus impact its weighting on the indices it is part of. Bloomberry is among the 30 companies that are part of PSE Index, the local stock barometer.
GGAM had previously planned to unload these shares but this was interrupted by the legal dispute.
The long-running dispute stemmed from the ouster of GGAM from the management of Solaire in 2013 that the Las Vegas-based company claimed was unjust.
Bloomberry terminated its management contract with GGAM that year, alleging that the latter had breached their management services agreement (MSA). Under their deal, GGAM was supposed to provide technical and other advisory services to the Solaire project during its construction and fit-out stage.
GGAM later brought the case for arbitration at the Singaporean Arbitration Tribunal, arguing that it was Bloomberry that had violated their agreement.
The arbitration court in 2016 upheld GGAM’s claim to an 8.7-percent stake in Bloomberry, and pointed out that GGAM had not misled SPI and BRHI into signing the MSA.
It added that the termination of the management deal was “not justified,” as the services rendered by the SPI and BRHI management team “should be considered as services rendered by GGAM under the MSA.”
The amount of settlement agreed upon is close to the amount that Bloomberry would have paid if it did not oppose the monetary award given by the Singaporean arbitration court to GGAM.
Bloomberry had been ordered to pay GGAM $296 million in 2019, a decision that the Razon-led company later appealed. However, Singapore’s Court of Appeal junked its appeal in 2021.
