WEEKLY FEATURE: Okada’s Chiller in Manila

The $2 billion Manila resort planned by Japanese billionaire Kazuo Okada (l.) is on the rocks again. His Philippine subsidiary has fired one of the partners it secured last year to comply with the country’s rules on local ownership. The other partner has quit the project. And PAGCOR seems to be getting a little anxious about the 2015 opening date.

Philippines’ Century Properties Group has asked a local court to prevent Kazuo Okada’s Universal Entertainment from terminating their agreement to jointly develop a US billion casino complex in the Entertainment City resort district on Manila Bay.

Century said it also sent a notice of dispute to Tokyo-based Universal and its Philippine subsidiaries challenging the validity of the termination, which Universal ordered after a second local partner, First Paramount Holdings 888, withdrew from the venture.

The partnerships were designed to resolve charges that Universal had sought to evade compliance with laws restricting foreign ownership of land to no more than 40 percent. In 2012, the Philippine Justice Department issued a legal opinion indicating the ownership structure of Eagle I Landholdings, Universal’s local affiliate, breached those laws because Aruze USA, Universal’s U.S.-based machine gaming supplier, effectively held 64 percent of Eagle I in the form of direct and indirect stakes.

Century agreed to acquire 36 percent of Eagle I as part of a deal that calls for Century to develop five hectares of the Entertainment City site. First Paramount agreed to buy 24 percent of Eagle 1.

In contesting the termination, Century said First Paramount’s withdrawal does not nullify its deal because an alternative partnership with another qualified Filipino company could be negotiated. The company alleges that Universal wanted changes in the agreement that would have eliminated its exclusive rights to the luxury commercial and residential portions of the project.

Construction, meanwhile, is reported to be proceeding swiftly at the site, known as Manila Bay Resorts, but the government says Okada and his companies need to resolve their various issues if they want to retain the license there.

The group also is under investigation by U.S. Justice Department and the Philippines’ National Bureau of Investigation on suspicions first reported by Reuters late in 2012 that bribes were paid to secure preferential treatment for Eagle I. Universal and Okada have denied those allegations and are suing Reuters in Tokyo for defamation.

“They need to open by 2015,” said Cristino Naguiat, who heads the national regulator, the Philippine Amusement and Gaming Corporation, which has issued four licenses at Entertainment City and owns the district. “But let me emphasize that they cannot open the casino unless they have addressed all issues such as the allegations of bribery and the land ownership requirement.”

Naguiat added, however, that he is optimistic.

“They’ve already spent more than $200 million to $300 million already for the project,” he said. ”I think they will do everything they can to resolve all pending issues.  From what I heard, they already have about 4,000 workers.”