Bloomberry Resorts Corp, the Philippine leisure and entertainment group, raised $126 million from an accelerated top-up placement on Monday night.
The owner and operator of Solaire Resort & Casino, sold 345 million shares at P13 per unit, an 8.3% discount to the November 10 closing price under the leads of CLSA and UBS.
It initially sought to sell 346 million shares between P13 to P13.30 per share, representing a 6.2% to 8.3% discount to the November 10 close of P14.18 per unit, according to a term sheet seen by FinanceAsia. The base deal was $100 million, with an additional upsize option of 173 million shares bringing the deal to $154 million post-greenshoe.
Bankers spent the weekend gauging investor interest and managed to line up a number of anchor investors before the deal launched on Monday night. Books closed at midnight, with bankers describing the deal as well oversubscribed.
Investors included existing long-only institutional investors and a number of hedge funds. In addition, bankers note there were a number of new hedge funds focused on gaming that participated as well, even though the stock cannot be shorted.
More than 50 lines participated in the book with the top ten accounts taking between 60% to 65%, one banker noted.
"It's a good result to raise so much money in the Philippines in what has been a difficult market for placements generally," the banker told FinanceAsia. "We haven't seen many placements recently and there certainly have been very few this year in the Philippines."
Dealogic data shows Bloomberry's top-up was the sixth largest follow-on offering in the Philippines this year. The largest follow-on was in February when the Bank of the Philippine Islands raised $550.5 million.
The primary shares on offer in this share sale represent 4.67% of enlarged share capital. There is a 90-day lockup period.
Proceeds will go towards paying down the company’s debt. Total liabilities stood at P39.6 billion ($882.6 million) as of September 30, compared with P24.3 billion for the first nine months of 2013.
The company will also use the money raised from the top-up placement for international expansion — bankers say the Philippine company is mulling opening resorts in Japan and Korea.
Earnings
Bloomberry reported strong earnings on November 5, with the issuer and syndicate looking to take advantage of the casino operator’s swing to profit to launch the placement.
The company reported a net profit of P3.3 billion up to September 30, a stark contrast from the net loss of P868.4 million for the same prior-year period. Revenues meanwhile rose 108% to P17.3 billion for the first nine months of 2014, from P8.3 billion last year.
The majority of its revenues come from gaming, which rose 113% to P16.4 billion from P7.7 billion.
Shares are up 62% up to November 10, making it the best performing gaming stock globally. And some analysts expect shares to rise further. JP Morgan analysts are forecasting shares will hit P16.00 per share by year-end, citing the successful ramp-up of Solaire in the first half of the year — Solaire reported a 40% rise in gaming revenues in the first half of the year.
Still, the stock isn’t cheap. Bloomberry is currently trading at 33.84 times 2014 earnings.
The top-up placement comes nearly one year after Las Vegas-based Global Gaming Asset Management (GGAM) attempted to sell its entire 8.7% stake in Bloomberry.
The January attempted sale came after Bloomberry terminated the casino management agreement it had with GGAM in September 2013, just six months after the $1.2 billion Solaire Resort and Casino opened.
At the time, Bloomberry said GGAM had failed to perform its obligations under the agreement and had not spent any material time attending to the management of the Solaire, which was the first casino to open in Manila’s new Entertainment City gaming hub. GGAM denied this, and sought arbitration in Singapore.
Bloomberry put a five-day trading suspention in place and stopped the sale from happening.
