Wed, Apr 17, 9:29am by Staff Writer
NagaCorp said that Naga 3, the third phase of its NagaWorld casino resort, will cost around $3.5 billion.
Casino News Daily is reporting that half the casino and hospitality company’s costs related to the development will be covered by the company’s founder and chief executive officer.
Naga 3 is a major expansion of its existing integrated resort in the capital Cambodia, Phnom Penh.
NagaCorp is the exclusive operator of casino gambling in the Cambodian capital and the surrounding area.
The company announced its plan for the construction of Naga 3, the third phase of its NagaWorld hotel, casino and entertainment complex.
NagaCorp said last Sunday that it has decided that 50 per cent of the Naga 3 development project will be funded by internally generated funds.
The other 50 per cent will be covered by the company’s controlling shareholder, Dr Chen Lip Keong.
Aside from NagaCorp’s largest shareholder, Dr Chen is also the company’s founder and chief executive officer.
According to the Sunday statement, Naga 3 will include five towers, of which two 45-story towers, two 66-story towers and one 48-story tower.
The whole resort will spread across 544,801 square metres.
Naga 3 will feature multiple new hotels, food and beverage facilities, swimming pools, meeting and event facilities, and VIP gaming rooms, among other amenities.
NagaCorp said that Naga 3’s project appraiser, Colliers, is of the opinion that project costs, excluding land cost, are reasonable at $3.5 billion for a total gross area of 544,801 square metres.
The price was decided upon after NagaCorp had provided Colliers with two separate development cost estimates by two separate architects.
Naga 3 will represent the third expansion phase of the NagaWorld integrated resort.
The property, which is now referred to as Naga 1, opened doors on its current site in 2003.
Prior to that, it had operated as a riverboat casino for nearly two decades.
In late 2017, NagaCorp launched Naga 2, the integrated resort’s second expansion phase.
Naga 1 and 2 are connected by an underground shopping centre, NagaCity Walk.
Naga 3 will be linked to its sister properties with the subterranean facility.
NAGACORP Ltd, which owns Phnom Penh’s only licensed casino NagaWorld, announced its $4 billion Naga 3 Project on the site of the former “White Building” in Tonle Bassac commune, a 29-page document filed with the Stock Exchange of Hong Kong Limited said.
— The Phnom Penh Post (@phnompenhpost) April 8, 2019
NagaWorld said in its Sunday filing that key benefits from its financing strategy for Naga 3 would include cash advances nil of interest costs, continued high dividend policy for minority shareholders, and mitigation of any potential dilutive effects as a result from incremental earnings from Naga 3, among others.
As part of the agreement under which Dr Chen will partly finance the project, the NagaCorp CEO will receive a 1.14 billion settlement shares in the company.
This will increase Dr Chen’s stake in NagaCorp to 73.17 per cent to 66.1 per cent.
Morgan Stanley Asia Ltd said Naga 3 might be “a bit too ambitious” given its scale.
“NagaCorp has net cash of US$110 million as of year-end 2018, and it can generate excess cash of US$300 million annually (after paying US$300 million in dividends),” Praveen Choudhary and Jeremy An said.
“The company plans either a debt offering (high interest expense) or to get funding from the chairman (meaning future equity dilution),” they said.
“Phase 2 was a success in terms of return on invested capital, but Phase 3 – with more than 4,000 keys and huge capex – may be a bit too ambitious.”
NagaCorp also published its results for the first quarter of 2019 last week.
The company said its gross gaming revenue for the first three months this year stood at US$321.2 million, up 32 per cent from the prior-year quarter.
Such growth was supported by a 45 per cent increase in rolling chip turnover in the group’s VIP business, to neatly US$8.19 billion in the three months to March 31.
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