A Singapore-based arbitration court ruled that GGAM’s management services contract with Solaire Resorts had been unjustly terminated in 2013.
MANILA, Philippines – Enrique Razon’s Bloomberry Resorts Corp., the hotel and casino operator of Solaire Resorts and Casino, has lost a case it filed against its former manager, Las Vegas-based Global Gaming Philippines LLG (GGAM).
A Singapore-based arbitration court ruled that GGAM’s management services contract with Solaire Resorts had been unjustly terminated in 2013.
In a Sept. 20 decision, the tribunal also upheld GGAM’s claim to an 8.7-percent take in Bloomberry Resorts.
Bloomberry disclosed to the Philippine Stock Exchange (PSE) yesterday that the Singaporean Arbitration Tribunal hearing the dispute between Bloomberry and Sureste Properties Inc. (SPI) and GGAM had issued a “partial award on liability.”
In its decision, the Singaporean tribunal ruled that GGAM did not mislead Bloomberry and SPI into signing the management services agreement (MSA) and that Bloomberry was not justified in terminating the MSA because the services rendered by the Bloomberry management should be considered as services rendered by GGAM under the MSA.
The tribunal also upheld GGAM’s claim to some 921 million Bloomberry shares.
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There is no basis for Bloomberry and SPI to challenge GGAM’s title to the 921 million shares because the grounds for termination were not substantial and fundamental, thus GGAM can exercise its rights in relation to those shares, including the right to sell them.
In 2013, Bloomberry terminated the management contract with GGAM, claiming a breach of contract, but GGAM brought the case for arbitration, claiming it was Bloomberry that violated the contract.
Under the agreement, GGAM was supposed to provide advisory services during the construction stage and management services during commercial operations.
However, the tribunal rejected GGAM’s claim that it was defamed by the publicized statements of Razon on the issue.
In its disclosure, Bloomberry said the ruling of the arbitral tribunal can only be enforced in the Philippines through an order of a Philippine court of proper jurisdiction after appropriate proceedings, taking into account applicable Philippine law and public policy.
Commenting on the latest development, listed market research company COL Financial said the ruling creates an overhang on Bloomberry as GGAM is free to sell its 921 million shares.
“This represents 8.37 percent of the outstanding shares of Bloomberry. But note that GGAM cannot sell its shares as long as the arbitration is still ongoing, which it is. The ruling also said Bloomberry was not justified to terminate the MSA and, therefore, means that Bloomberry would have to pay GGAM in damages, but this amount still has to be decided by the tribunal. This uncertainty creates another overhang on Bloomberry,” COL Financial said.
It said the uncertainty of the amount in damages Bloomberry would be required to pay would dampen sentiment on the stock.
“As for the shares owned by GGAM, this will not have an impact on Bloomberry fundamentally, but this serves as an overhang on the share price as this represent a huge supply that will be available when arbitration is concluded,” COL also said.
