Legislation

Philippines – Universal and Century Properties prepare for legal battle over Eagle 1 shares

By Phil - 27 March 2014

Tokyo-based Universal Entertainment has severed a deal with Century Properties which would have seen the Philippine-based company funded part of the US$2bn Manila Bay Resorts casino complex it is developing on Manila Bay in the Philippines.

Century Properties, who said it would contest the notice of termination, had agreed to buy a 36 per cent stake in Eagle I Landholdings, a subsidiary of Universal that owns a plot of land on which Manila Bay Resorts is being built.

Century claimed said that amendments to the terms of the agreement being suggested by Universal would have seen it lose exclusivity for the development of a luxury commercial and residential section of the development.

Kristina Garcia, Director of investor relations at Century Properties, said: ” When we file our response the notice of termination, we’ll specify the changes we were not amenable to. They were proposing something else, they wanted something else. It was more on the exclusivity to do the residential and commercial which we did not sign, because what we wanted was the original structure that they proposed. We allocated resources, we did the master plan and we spent considerable amount of time working on the transaction and planning of the development.”

The fallout centred on Century Properties’ investment in 432 million voting preferred shares for some $12m that would entitle it to a 36 per cent stake in Eagle I after an increase in the latter’s authorised capital stock; as well as a third party, First Paramount Holdings 888, that was purchasing 288m preferred shares for $8m that gave it a 24 per cent stake in Eagle I.
Century said in its disclosure that it sent a notice of dispute to Eagle I, Eagle II and Brontia last March 21 “which triggered a mandatory 21-day discussion period by the parties. The 21-day period is still effective.”

Century Properties said; “The company will shortly be replying to the Notice of Termination. CPG is of the strong legal position that the Notice of Termination is not only premature, but also is unfounded as it lacks legal and contractual basis.

It added that it was making moves “to protect and enforce its legal rights and interests in the investment agreement, memorandum of agreement and subscription agreement all dated Oct. 31, 2013 before any court, tribunal, or agency within or outside the Philippines.”
An Eagle I official said: “We now have to stop negotiation since one of the three parties withdrew the agreement, therefore we sent a notice of termination to Century Properties.”

The issue of shares to the two companies would have given more than 60 per cent of Eagle 1 to Philippine interest which Universal said in October would ‘create a more favourable situation in response to the land ownership requirements.’