Pagcor allowed PH resorts to use part of its P1.25 billion escrow fund with the casino regulator to bankroll the ongoing Emerald Bay project as the pandemic held up cash inflows to Uy.
PHR was granted a provisional license for the Emerald Bay in Cebu and the Base hotel casino in Clark Freeport Zone in Pampanga in 2017 and 2018, respectively, on condition that it invest a minimum of $500 million and deposit an escrow fund of $25 million as Pagcor’s guarantee to Uy’s commitments.
PHR used more than P1 billion of the escrow funds in 2020 as the pandemic dried up its projects’ funding sources.
Pagcor allowed PHR to use the escrow funds for Emerald starting July 2020 on three conditions:
1) Drawdowns must be used exclusively for the development of the project;
2) PH Resorts must furnish PAGCOR with a monthly report of drawdowns and bank’s statement of the escrow account; and
3) Replenish the maintaining balance not later than 15 calendar days from the date escrow account fell below the P1.25 billion maintaining balance.
PHR said the escrow funds enabled it to comply with Pagcor’s casino license requirements. It said its cash in escrow dropped to P241.8 million as of end-2020 from P1.267 billion as of end-2019.
Pagcor had previously allowed PHR to fix its finances in 2019 in order to comply with its 70:30 debt-to-equity requirements under its provisional license.
PHR was forced to utilize its escrow funds as its debt exceeded its assets by P7.5 billion in 2020 and it scrambled to seek rollover of its debt obligations to China Banking Corp. and United Coconut Planters Bank.
An investment banker said PHR would need to raise at least P1 billion either from new loans or another equity offering to solve his liquidity problems and meet his commitments to finish the first phase of the Emerald Bay casino by 2022.
Uy raised P756 million from a follow-on offering last November.