Bloomberry Resorts assesses buying land

The land were the Solaire Resort & Casino is located could be bought by Bloomberry Resorts, which is assessing the operation’s financial impact.

Philippines.- Philippine-based Bloomberry Resorts could soon buy a land where the Solaire Resort & Casino is located but is annalysing a potential debt levels rise and a reduction in return on invested capital if the operation is completed. The land will be auctioned by the Philippine Amusement & Gaming Corp. (PAGCOR) with offers due by November 27 and will have a minimum bid of US$740 million.

According to Morgan Stanley, the negative impact on Bloomberry’s finances would take effect in the short term but may improve valuations in the long term. The firm confirmed in a note that the company’s net debt will jump to US$884.6 million by the end of the third quarter and said that it would cut by 9 per cent the return on invested capital to 15 per cent.

Morgan Stanley also advanced that, if the purchase is funded through debt, interest expenses will climb by 17.5 million and cut net income and free cash flow to equity. “The saving of lease payment of [4.88 million] per annum (till July 2033), which is 2 percent of 2017e EBITDA, is not material in our view,” the firm said.

Nonetheless, the financial firm estimated that, since land values are rising in the Philippines, Bloomberry could see its market valuation rising if it owned the land. Morgan Stanley also explained that, if it continues to lease, yearly payments could rise by 9 times and reduce 2018 EBITDA by 13 percent.