Inside Asian Gaming

November 2014 inside asian gaming 31 PAGCOR has successfully managed what had been viewed early on as a worrisome situation, the operator/regulator dual role.” Yet Mr Aquino’s cabinet is divided over an additional license for Manila, according to news reports, with the Department of Tourism in favor, PAGCOR in opposition, and the Department of Finance “in between the two,” according to the president. The Catholic Church, an influential voice in matters of social policy, is expected to oppose another casino license, he has said. ON THE FLY Caesars wants to bring a novel concept to Manila. “We are pursuing a site adjacent to the airport,” Mr Tight says. “It would be a unique opportunity to create something truly differentiated, where you could fly in directly to the resort. That’s something we’re discussing with the airport authority.” Caesars’ involvement would also include efforts to improve Ninoy Aquino, ranked as one of the world’s worst international gateways. The direct connection might include private plane passengers entering the resort from the runway, allowing arriving guests to bypass Manila traffic and blight as well as alleviate the security concerns that reportedly weigh on Chinese travelers. PAGCOR closed its money-losing Airport Casino Filipino, one of the largest in its portfolio, earlier this year, but Mr Tight says that site would not be suitable because it’s not directly adjacent to the airport. Entertainment City, about five kilometers from the airport but subject to the vagaries of Manila traffic, is also not of interest, he says. What the company is proposing is “a full-on integrated resort,” as he terms it. “It would have a couple of hotels, a very high-end hotel along with a five-star hotel, so definitely positioned as Caesars is in the US at a high level of quality and luxury. We would have an arena of sorts and a cultural component as well.” Gaming would be targeted at VIP and premium mass customers, he says. For retail, dining and entertainment, Caesars wants to emulate The Linq, the outdoor shopping and nightlife district the company opened on the Las Vegas Strip earlier this year, anchored by the world’s tallest observation wheel, The High Roller. “We’d like to do something like that in Manila,” Mr Tight, a former Disney executive, says. “Not with the world’s highest wheel, but a pedestrian outdoor entertainment district that runs the spine of the plan and integrates the various hospitality offerings of the resort.” The property could open about three and a half years after receiving approval from the authorities, he says. President Aquino said Caesars forecasts 70% of the IR’s revenue In Focus “It would be a unique opportunity to create something truly differentiated, where you could fly in directly to the resort. That’s something we’re discussing with the airport authority.” Steven Tight | president of International Development, Caesars Entertainment six months ended June 30, 2014, and we expect to experience negative operating cash flows for the remainder of 2014 and the foreseeable future, and do not expect that our cash flow from operations will be sufficient to repay our indebtedness in the long term, and we will ultimately seek a refinancing, amendment, or restructuring of our debt, or if necessary, pursue additional debt or equity offerings.” If there is a consensus among investment analysts it’s that a reorganization under the protection of Chapter 11 of the US Bankruptcy Code is inevitable. Yet, Caesars continues to propose major greenfield projects both at home and abroad, headlined by a planned megaresort in South Korea with partners pegged at US$800 million. The company’s more recent pitch in Manila is for a resort that could cost $1.5 billion. President of International Development Steven Tight insists it is doable. “Right now, Caesars has $3 billion in cash,” he says. More importantly, perhaps, he adds, “We don’t expect that we would necessarily be the majority shareholder” in a Manila IR. “We would look to brand and operate it. We would be looking to partner with a strong local Philippine partner, and we’re in discussions with a Philippine partner that would join the consortium that’s been with us from the start.” Show Me the Money For the first six months of 2014, Caesars Entertainment posted a loss of US$852.9 million, nearly double that of a year earlier. The company has $24.2 billion in long-term debt, mainly due to a 2008 leveraged buyout that took the Las Vegas-based casino giant private. To try to restructure and refinance it all, Caesars went public again in 2012. The company has since been immersed in refinancing billions in loans and shielding key assets within a complex amalgam of entities created for that purpose. But with revenue growth hard to come by in a generally weak operating environment outside Las Vegas, the outlook is not rosy. In its second-quarter earnings filing the company said, “We experienced negative operating cash flows of $386.8 million for the Cash-strapped Caesars sees equity in the brand — but how much? >>