Corporate News

Alliance Global group sets aside combined P100B for capital spending

Posted on September 16, 2015

THE COMBINED war chest of the subsidiaries of Alliance Global Group, Inc. (AGI) will reach nearly P100 billion this year, as the conglomerate lays the groundwork for its long-term growth.

During the company’s stockholders meeting in Quezon City yesterday, AGI President Kingson U. Sian said Megaworld Corp. is investing P65 billion; Emperador, Inc., P21 billion; Travellers International Hotel Group, Inc., P8 billion; and, Golden Arches Development Corp., P2.7 billion.

The operating units will fund the capital spending budget using internally generated cash.

“The debt market is always an option but, with the amount of cash we generate, we will fund most of it internally,” Mr. Sian said.

AGI’s outlook on the Philippine gaming industry remains optimistic, even as the challenges in China and the entry of new casino players may hurt the prospects of Travellers, its joint venture with the Genting Group.

“Kung affected sila, affected tayo (If they feel the pinch, we do too).

There’s a multiplier effect,” Mr. Sian told reporters after the meeting, referring to the impact of the woes in China on Travellers.

In the second quarter, the operator of Resorts World Manila’s net revenues -- which come mainly from gaming -- declined 21% to P5.5 billion from P6.96 billion.

Asked when Travellers’ revenues can recover, Mr. Sian said: “The market has to absorb the capacity first. The market grew three times with three players. I don’t think the capacity grew by three times.”

Apart from Resorts World Manila, the existing casinos in the Philippines are Solaire Resort and Casino of Bloomberry Resorts Corp. and City of Dreams Manila, a joint venture between retail magnate Henry Sy and Macau-based Melco Crown Entertainment,
“The long-term view is good especially if you link it to tourism. The government is still very positive on hitting the 10-million mark,” Mr. Sian said, referring to the government’s target on foreign tourist arrivals.

Travellers is building its second integrated resort in Entertainment City, which it has renamed to Westside City Resorts World from Bayshore City Resorts World.

“We changed the name to Westside which is more appropriate with the location and what we want to do with the place,” Mr. Sian said, noting that the word “bay” is overused already.

Okada-led Tiger Resort, Leisure and Entertainment, Inc. is building the Manila Bay Resorts in Entertainment City.

Meanwhile, Golden Arches, the master licensee of McDonald’s in the Philippines, will miss a target to have a network of 500 stores this year, citing “delays in construction.”

Instead, Golden Arches will reach the milestone in the first half of 2016 with the quick service restaurant operator expected to end the year with around 480 stores, Mr. Sian said.

A portion of Golden Arches’s P2.7-billion capex program will be carried over into next year because of the delay in expansion, he added.

In contrast, Megaworld is slightly ahead of its goal of hitting P90-95 billion in reservation sales this year after first-half numbers reached P48 billion, Mr. Sian said. -- Krista Angela M. Montealegre