The largest gaming operator in Asia has made a step closer to significantly increasing its revenue. Rumors from reliable sources have it that Suncity Group Holdings has signed an agreement with Travellers International Hotel Group. Now part of what is super amazing is that this new deal would be viable for the next 45 years.
Under the deal, Suncity will be in charge of operations at Westside City Resorts World, the new casino-hotel development in the Philippines that is still under construction in Manila. According to news by Calvin Ayre, SunTrust Home Developers, an entity of Suncity,will be responsible for running day to day operations at the venue.
Suncity purchased SunTrust’s majority shares from MegaWorld, automatically making SunTrust a part of Suncity. At the time of the purchase, SunTrust had plans to lease Westside and become the exclusive operator of the venue. The recent agreement between the two companies comes as a relief to SunTrust, which had spent months trying to close the deal.
Westside City Resorts is expected to open its doors sometime towards the end of 2022. It is estimated to be worth not less than $340 million, though the actual cost is expected to be much higher.
Without including any cost overruns, the project is valued at $700 million. The total floor area of the venue will be 1.95 million square feet. It be home to 400 hotel rooms – expected to be state of the art, 400 gaming tables and 1,200 slots.
As per the agreement between the two companies, SunTrust is going to be paying $10.6 million a year for the lease. The amount was arrived at on the basis of the venue’s current market value of $340 million, and is payable in two separate installments.
Besides, SunTrust will pay $185.5 million as “right of use” fees and an additional $184.5 million as lease liability fees. The agreement has two phases. The initial phase is to last for 20 years till August 19 2039. After the 20 years, the contract will either be renewed automatically or be terminated by mutual agreement.
The lease agreement offers Travellers an exit strategy should either Suncity or SunTrust violate any of the stipulated laws of the land and consequently have their licenses revoked. This is common in many contracts of this nature.
Though there is no reason to worry at the moment, it is always possible for issues to arise and cause a huge set back. For instance, financial regulators are already investigating Suncity’s purchase of SunTrust. For this, they offered all the past records and requested access to all accounting data in the company. However, there is no way to predict the results of the investigations, but the likely hood of informational inconsistencies seems inevitable and this might brew serious trouble to anyone found on the wrong.
The agreement has to be passed by a few more parties before it is set on stone. Suncity shareholders as well as the Hong Kong Stock Exchange have to give their go ahead on the deal.
