SBMA offers casino property to Korean firm
SUBIC BAY FREEPORT, Philippines—The Subic Bay Metropolitan Authority (SBMA) blockaded the hotels and a casino that a Hong Kong-based company is operating so it could offer the property to a Korean company that also wants to build a hotel and casino here, the firm’s liquidator said.
David Maund, a liquidator appointed by a Hong Kong court in 2006 to bring back Legend International Resorts Ltd. (LIRL) to profitability, told the Philippine Daily Inquirer in a phone interview from Hong Kong last week that the SBMA suddenly changed its approach in dealing with LIRL.
“[We learned that] the SBMA [was] paving the way for another group to take over [LIRL’s properties]. They blockaded the establishments to intimidate potential guests and users of the hotel,” Maund said.
The SBMA has offered LIRL’s properties to Neorex Philkor Inc., a Korean company that tried to build Ocean 9 hotel-casino at a tree park here last year, he said.
SBMA Administrator Armand Arreza confirmed that Neorex had been assigned LIRL’s properties. He said a lease contract with the Korean company had been approved by the SBMA.
“The assignment to another group is not the main issue. In fact, the liquidator has been trying to assign the property … for almost two years. Their repeated failure to honor their financial obligations with the SBMA and Pagcor (Philippine Amusement and Gaming Corp.) resulted in the termination of their lease,” Arreza said.
In 2006, Pagcor revoked LIRL’s gaming license when the company could not pay more than P1 billion it owed in the form of casino shares.
Eric Park, Neorex manager, said his company had “no clear plans for now.”
“Several sites were offered [by the SBMA], but each has its own issue to be considered carefully,” Park said.
Maund said the measures that SBMA officials were taking are “illegal.” He said that the company “agreed to the rehabilitation plan and there are still ongoing proceedings in Hong Kong. It is extremely regrettable that they are doing this.”
The SBMA barricaded LIRL establishments after the courts granted the SBMA’s motion to dismiss the rehabilitation proceedings and lift the stay order.
In an earlier interview, Arreza said the court ruling was executory.
“We saw that the rehabilitation proceeding was going nowhere, so we appealed to the court to end it, which the court did,” he said.
Arreza said the rehabilitation plan failed because “one of the premises of the corporate rehabilitation plan was having the gaming license from Pagcor.”
“Also, contrary to what LIRL had committed to under the corporate rehabilitation program, the company had given up its leases on other establishments it ran like Feng Huang Restaurant, Garden Units Hotel, Grand Seasons Hotel, and Neptune Club by the time we filed the motion to dismiss,” he said.
He said the SBMA had to move to protect the government’s interest.
“As far as we are concerned, the SBMA does not recognize the proceedings in Hong Kong,” he said.
But Maund said he represented all of LIRL’s creditors, both in the Philippines and abroad. “This includes the SBMA. My responsibility is to all of them,” he said.
He said the hedge fund Avenue and the firm Morgan Stanley have the largest shares of LIRL’s debt.
“They bought a massive amount of LIRL’s bank debts. What LIRL owes the SBMA is just a small fraction of the total debt of the company. The interests of the other creditors must not be prejudiced. All the creditors must be treated equally … unless there is a reason not to do so,” Maund said.
Asked whether LIRL would continue operating its establishments here, Maund said the firm was seeking an injunction against the SBMA to get it “operating profitably and without hindrances again.”
As for LIRL’s workers who may lose their jobs if the company goes under, Maund said: “[I am] concerned about their future. It depends on whether we can successfully resist what the SBMA is trying to do.” By Robert Gonzaga - Inquirer Central Luzon Desk