DigiPlus: Internal funds sufficient for IEC deal

DIGIPLUS Interactive Corp., the listed digital entertainment firm behind BingoPlus, ArenaPlus, and GameZone, said it intends to use internal funds for its potential controlling stake acquisition of Hong Kong-listed International Entertainment Corp. (IEC), while remaining open to short-term financing if necessary.

“We do expect that we have sufficient internal funds, but if we need it, we can also explore some short-term financing,” DigiPlus President Tsui Kin Ming told reporters on Wednesday.

Earlier this week, DigiPlus Chairman Eusebio H. Tanco said the company signed a convertible notes agreement granting it the rights to acquire a controlling stake in IEC, the owner and operator of New Coast Hotel Manila, an integrated hotel and casino complex.

The subscription for convertible notes totals HK$1.6 billion (around P12 billion) and will be issued in two tranches. The first tranche, worth HK$800 million, will be completed upon satisfaction of customary conditions, while the second tranche will follow within three months, subject to mutually agreed terms.

DigiPlus expects to complete the arrangement with IEC within eight to nine weeks, Mr. Tsui said, adding that IEC shareholders must approve the agreement and obtain clearance from the Securities and Futures Commission of Hong Kong and the Hong Kong Stock Exchange.

The first payment is projected by January, while the second will be in April, he said.

“At the same time we also have to obtain approval from PCC (Philippine Competition Commission) for the acquisitions. 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,” Mr. Tsui added.

IEC owns and operates the New Coast Hotel Manila, previously known as the New World Hotel Manila, with 96 gaming tables, 495 slot machines, and other gaming amenities.

For Mr. Tsui, acquiring IEC would further expand DigiPlus’ presence in the mass gaming market in the Philippines.

“We see the competition in the entertainment city is getting very intense and the growth rate is kind of declining as well. 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,” he said.

“Of course, the cost of investment is much lower to enter into a land-based casino in the Malate area versus anyone else in the entertainment city. It will cost at least $1 billion or more for the entire complex in the 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.”

DigiPlus said it is not actively pursuing a dual listing on the Hong Kong Stock Exchange but remains open to courting international investors and weighing the strategic advantages of an overseas listing.

For the third quarter, DigiPlus reported net income attributable to the parent company of P1.71 billion, down 51% from P3.52 billion in the same period last year.

At the local bourse on Thursday, shares in the company closed 30 centavos, or 1.11% lower, at P26.70 apiece. — Ashley Erika O. Jose