Embattled PH Resorts Group reported a net loss of PHP392.9 million ($6.7 million) for the nine months ended September 30th, 2024.
This figure represents an improvement compared to the PHP2.20 billion ($37 million) loss during the same period in 2023. However, the Group continues to face financial difficulties, primarily driven by Emerald Bay’s pre-development expenses. As of September 30th, 2024, the Group’s deficit stood at PHP7.22 billion ($123 million), up from PHP4.81 billion a year earlier.
Additionally, according to the quarterly results updated to the Philippine Stock Exchange on Friday, PH Resorts reports that its current liabilities exceeded its current assets by PHP12.55 billion ($214 million), compared to PHP4.15 billion ($71 million) at the end of 2023.
Negative operating cash flows of PHP127.8 million for the first nine months of 2024, compared to PHP41.7 million ($710,000) in 2023, have raised concerns about the Group’s ability to continue as a going concern. These financial challenges suggest significant uncertainty regarding the Group’s ability to meet its obligations and realize its assets in the normal course of business.
The Group, which is active in the gaming and tourism sectors, has an ongoing construction project, Emerald Bay, on Mactan Island, Cebu, which is expected to benefit from a 7-year exclusivity period upon completion. It also operates a resort on Panglao Island, Bohol, which began commercial operations in 2018.
To secure new investments, PH Travel, the Group’s subsidiary, initially signed a term sheet with Bloomberry Resorts Corporation (BRC) in May 2022 for a potential investment in LLI and CGLC. However, BRC terminated the agreement in March 2023, prompting PH Travel to seek alternative investors. In December 2023, PH Travel entered into a new agreement with Tiger Resort Leisure & Entertainment, Inc. (TRLEI) to take over the Emerald Bay project.Â
Unfortunately, this term sheet was also terminated in July 2024, despite receiving nonrefundable payments of PHP327.6 million ($5.6 million), which were later reclassified as income. This development has allowed PH Travel to reengage with other investors, and discussions are ongoing with multiple strategic parties as due diligence continues.
To address its liquidity issues, PH Resorts Group has secured financial support from its ultimate parent company, which has committed to covering operating expenses and helping the Group meet its financial obligations. The Group is also in ongoing discussions with the Land Bank of the Philippines to extend repayments on a PHP975.0 million ($16.6 million) loan, with Udenna Corporation providing a support letter to ensure repayment.
Furthermore, the parent company has pledged to honor the PHP1.0 billion ($17 million) deposit related to the terminated agreement with BRC until repayment is feasible. Despite these challenges, PH Resorts remains optimistic about its ongoing investor discussions and believes these efforts will generate sufficient cash flow to meet its obligations and sustain its operations moving forward.
