PH Resorts Group Holdings Inc. (PHR), the developer behind the Emerald Bay resort project, has submitted a business plan to the Philippine Stock Exchange outlining its strategy to convert PHP4.09 billion ($70.3 million) in parent company advances into common stock by the 4Q25, aiming to resolve its negative stockholders’ equity position.
The company reported a negative equity position of PHP503.7 million ($8.7 million) as of March 31st, 2025, worsening from PHP229.6 million ($3.9 million) at the end of 2024. PHR President Raymundo Martin M. Escalona and Chief Financial Officer Lara Lorenzana submitted the recovery plan to the PSE on July 11th, 2025.
The primary cause of the negative equity stems from capital infusions by parent company Udenna Corporation being classified as liabilities rather than equity due to insufficient authorized capital stock.
‘These capital infusions, amounting to PHP4.21 billion ($72.4 million) as of March 31st, 2025, were booked as advances for future stock subscriptions, a liability in the Statement of Financial Position due to insufficient authorized capital stock of the Company,’ the filing states.
Additional factors contributing to the negative position include a significant financing transaction with Chinabank involving the assignment of Emerald Bay properties, pre-operating costs for the resort development, and a negative equity reserve related to a 2018 reverse acquisition.
The Chinabank transaction occurred after PHR’s subsidiary LapuLapu Leisure Inc. failed to meet a repurchase deadline under a previous refinancing deal. In October 2023, Chinabank and LapuLapu Leisure Inc. agreed to sell the Emerald Bay property to the bank with an option to buy it back by March 2025 if new investors were secured. Following the missed deadline, Chinabank stated in early May that it would sell the 12.4-hectare Cebu land and had been discussing the acquisition with several interested parties.
To address the situation, PHR has already secured board and shareholder approval to increase its authorized capital stock from PHP8 billion ($137.6 million) to PHP15 billion ($258 million) on April 30th, 2025. The application requires reapproval at the company’s Annual Stockholders’ Meeting scheduled for July 17th, 2025, as Securities and Exchange Commission regulations mandate filing within six months of stockholder approval.
Once approved, the company plans to convert PHP3.37 billion ($58 million) of advances for future stock subscription and PHP718 million ($12.3 million) of deposits for future stock subscription into equity. According to proforma financial statements included in the filing, this conversion would result in a positive equity position of PHP2.86 billion ($49.2 million) as of March 31st, 2025.
PHR operates as the parent company of PH Travel and Leisure Holdings Corp., which manages real estate property development including resorts, hotels, casinos, clubhouses and sports facilities. The company’s indirect subsidiaries include LapuLapu Leisure Inc., LapuLapu Land Inc., Donatela Hotel Panglao Corp., and Davao PH Resort Corp.
Originally planned as Cebu’s second integrated resort after NUSTAR, the Emerald Bay project included a five-star hotel with two 15-story towers, 642 rooms, four pools, 18 F&B outlets, retail areas, event spaces, and a gaming floor with over 700 machines and 140 tables.
