DigiPlus taps cash to fund P12-B casino deal

DigiPlus Interactive Corp. is confident its own cash reserves are enough to fund its planned P12 billion acquisition of Hong Kong-listed International Entertainment Corp. (IEC) as it expands into the offline gaming market.

DigiPlus President Andy Tsui told reporters on Wednesday that the company still holds “over P19 billion” in cash, more than enough to cover most of the transaction.

“We do expect that we have sufficient internal funds but if we need it we can also explore some short-term financing,” Tsui said.

The deal comes via a HK$1.6 billion, or around P12 billion, five-year convertible notes agreement, which carries a 3 percent interest rate and gives DigiPlus the right to acquire a 53.89 percent stake in IEC. 

If DigiPlus chooses not to convert, the notes are redeemable at 108 percent at maturity.

Tsui said the acquisition is expected to be finalized within eight to nine weeks after IEC shareholders approve the agreement, with the first payment scheduled for early January and the second in April. 

The first HK$800 million tranche will be completed once customary conditions are met, with the remainder following within three months under mutually agreed terms.

“We also have to obtain approval from the PCC (Philippine Competition Commission) for the acquisitions. So that might take maybe six to nine months, we still don’t know what the time is on that one. So until we finish the payment and the approval process then we can consider converting,” Tsui added.

IEC owns the 203-key New Coast Hotel Manila, a hotel and casino complex in Malate licensed by PAGCOR. Formerly New World Hotel Manila, it rebranded in 2020 and operates 96 gaming tables, 495 slot machines, and other gaming amenities.

For DigiPlus, the acquisition offers a foothold in the mass-market gaming segment, especially outside the crowded Entertainment City area.

“We see the competition in the entertainment city is getting very intense and the growth rate is kind of declining as well. So we think that if we position ourselves in the Malate area, we could achieve much stronger growth because there’s only one casino or integrated resort in that area,” Tsui said.

“Of course, the cost of investment is much lower to enter into a land-based casino in the Malate area versus any else in the entertainment city. It will cost at least $1 billion or more for the entire complex in Entertainment City. So I think that’s why we decided to go with IEC because we will have a chance to own the majority ownership around 53.9 percent,” he added.

DigiPlus is also seeking a whitewash waiver to acquire IEC without triggering a tender offer to other investors. 

On the possibility of a dual listing in Hong Kong, Tsui said the company is focused on integration first.

“At the moment, I think we don’t have that idea yet, but we’re open because the benefit of having a Hong Kong listed company it will enlarge our investor base we can tap into a lot of international investors with higher liquidity. Now we’re focusing on the integration first,” he said.