Wed, May 8, 1:11pm by Staff Writer
NagaCorp’s founder is giving investors a $1.8 billion confidence boost by investing in what is becoming one of the world’s fastest growing gambling hotspots.
The company’s chief executive Chen Lip Keong told Reuters that he has pledged to cover more than half of the cost of building Asia’s largest gambling resort in the Cambodian capital of Phnom Penh.
The group faces stiff competition with both Cambodia and the gambling industry heavily dependent on China.
The personal punt by Chen is said to give investors hope and reassurance that this is a viable opportunity.
The company first outlined its expansion plans in April, but saw its share prices fall by roughly 14 per cent.
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.
There are still plenty of risks in embarking on this new project.
China has dominated investment into Cambodia, bringing expatriate workers and tourists.
— ReutersBreakingviews (@Breakingviews) May 7, 2019
Links with Beijing have been strong under Cambodian Prime Minister Hun Sen and the two sides announced a handful of deals including military aid late last month.
Any economic wobbles across the border could be a headache for visitors and for Naga.
Hun Sen’s dismal human rights record hardly guarantees stability, according to Retuers.
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.
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.
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.
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