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Japanese gaming magnate-Philippine property firm alliance falters
Publication Date : 28-03-2014
A dispute has erupted between the group of Japanese gaming magnate Kazuo Okada and Century Properties Group Inc. (CPG), one of the biggest property companies in the Philippines, on the local firm’s entry as a real estate partner in entertainment complex Manila Bay Resorts.
In a disclosure to the Philippine Stock Exchange on Thursday, CPG said it had received a notice of termination of the investment agreement signed in October last year with Okada’s local units. CPG said it was disputing the termination, which it believed to be “not only premature, but also is unfounded as it lacks legal and contractual basis.”
The deal would have made CPG part-owner of the holding firm that owns the 44-hectare estate within Pagcor Entertainment City where Okada’s gaming complex will rise. At the same time, CPG had signed up to build luxury residential and retail properties with more than 300,000 square metres of gross floor area on a five-hectare site within the complex.
CPG said it had sent a notice of dispute to Eagle I Landholdings Inc., Eagle II Holdco Inc. and Brontia Ltd. on March 21, 2014, which triggered a mandatory 21-day discussion period among the parties. Despite this 21-day period still in effect, CPG said that the Okada companies still delivered a notice of termination.
The disclosure did not say what the deal-breaker was in this case. In a press briefing, CPG director for investor relations Kristina Garcia said the Okada group was proposing changes to the investment agreement that were not acceptable to CPG, prompting the company to send the notice of dispute.
The proposed changes, Garcia claimed, would have taken away from CPG the “exclusivity” right to develop the luxury commercial and residential component of the project. And even while the discussions were still ongoing, she said CPG received a notice of termination. She added that CPG was not aware on whether Okada’s group was in talks with other parties.
“We were ready to fulfill our obligations in the original agreement. We have the funding prepared for our 2014 allocation and spent a considerable amount of time to plan and negotiate,” said Terrie Yu, CPG head of corporate communications. “We’re exploring our legal options but definitely we want to assert our exclusivity rights,” Yu said, adding that CPG was exploring legal remedy to the situation.
A spokesperson for the Okada group said the investment agreement had to be changed because it was executed by three parties, one of which pulled out. “We now have to stop the negotiation since one of the three parties withdrew from the agreement. Therefore, we sent a notice of termination to Century Properties.”
The third party in the agreement, which was implied to have backed out of the deal, is a privately held firm called First Paramount Holdings 888 Inc., which is headed by businesswoman Alice Eduardo.
In its disclosure, CPG added it had appointed a lawyer, Isabelita Sales, to protect and enforce its legal rights and interests in the investment agreement, memorandum of agreement and subscription deals dated Oct. 31, 2013. The company has also mandated Puno and Puno Law Offices to be its legal representative.
Okada’s group previously signed a property deal with CPG and a privately held firm called First Paramount Holdings 888 Inc. that would have given the two Filipino companies 60-per cent ownership of Eagle 1 Landholdings Inc., the Japanese group’s property affiliate in the country. CPG, for its part, would have owned 36 per cent of Eagle 1 under the deal.
Eagle 1 owns the 44-hectare land in Pagcor City where Okada’s $2-billion Manila Bay Resorts will rise as part of an envisioned Las Vegas-like gaming and entertainment cluster. CPG has set aside $12 million to pay for the 36 percent stake in Eagle 1.
CPG officials said the next step would be for the company to file its response to the notice of termination. Going to court was seen among the options but the officials said CPG would still proceed with the deal “if our dispute is resolved in a constructive manner in the days to come and if all conditions are met to protect the interest of our shareholders.”