NAGACORP Ltd has announced Phnom Penh expansion plans worth US$369 million, according to a Hong Kong Stock Exchange filing.
NagaCorp, the owner of the capital’s sole casino NagaWorld, has proposed two main projects under the names City Walk Inc and TSC Inc, with construction planned to begin in the third quarter of 2011.
City Walk’s projects include a two-level walkway with retail facilities covering 15,778 square metres called NagaCity Walk, and a 9,934-square metre tourist park sited along the Tonle Bassac River opposite Hun Sen Park.
TSC Inc is the company developing TSCLK Complex, a 97,620-square-metre project with gaming, retail, hotel and conference facilities. TSCLK Complex is slated to be completed in about 2016 near NagaWorld in Tonle Bassac commune.
Both projects will be developed by NagaCorp CEO Chen Lip Keong independently of NagaCorp. Upon completion, the projects will be acquired by NagaCorp in exchange for convertible bonds worth US$369 billion at a conversion price of HK$1.8376 (US$0.24) per share.
Chen Lip Keong building the project independently reduces risk for the HKSE listed firm, the filing claimed.
“[NagaCorp] will not need to bear the development funding, cost escalation and completion risks which are risks borne by [Chen Lip Keong],” the Monday filing said.
“In the event of cost overrun, the Consideration will still be capped at US$369,000,000 and there will not be any pricing adjustments for actual increment of costs incurred by [Chen Lip Keong],” while lower actual costs will also not result in a pricing adjustment.
The firm said the deal would allow NagaCorp to expand its operations and revenues.
“The Directors expect that the Acquisition represents a good investment opportunity for the Company to enlarge its asset base and enhance its source of income and competitiveness.”
Chen Lip Keong currently holds 63.07 percent of the issued share capital of NagaCorp, but he will end up with between 75 percent and 78.92 percent upon conversion of the bonds following the completion of the projects, the filing said.
Forbes magazine in May listed Chen Lip Keong as the 26th richest Malaysian, placing his net worth at $375 million.
Government approval for the projects has already been received, and development is slated to start in the third quarter 2011, according to the filing.
Some US$31.2 million has been spent on the projects to date.
Ministry of Land Management, Urban Planning and Construction officials could not be reached late yesterday for comment.