By Alexandria Grace C. Magno
THE ONGOING legal dispute between DigiPlus Interactive Corp. and former Party-list Rep. Elizaldy S. Co involving the Midas Hotel and Casino could weigh on operations and investor sentiment, though the financial impact on the company is expected to be limited, analysts said.
“Because the dispute concerns ownership or management of Midas Hotel and Casino, operations may face uncertainty as long as the appeal in court remains unresolved,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“For investors, a still-pending court appeal may introduce risk and uncertainty. In the long run, if the dispute drags on, it could compromise the value or use of Midas Hotel, limiting PLUS’ ability to leverage that asset, which could result in the company shifting its focus on alternative assets like New Coast or its digital platforms. However, if the dispute resolves cleanly, this could strengthen the company’s resolve and credibility, potentially helping PLUS when negotiating future partnerships or investments in Philippine tourism and gaming, as the broader hospitality industry in the Philippines is seeing large-scale hotel developments and growing demand,” he added.
AP Securities, Inc. Equity Research Analyst Shawn Ray R. Atienza said the issue may create “a slight hit on investor confidence on PLUS near-term, but boost reputation long term as the company’s exposé of Zaldy Co’s parasitical practices as a business partner shows their boldness to call out malpractices by peers.”
Law firm Villaraza & Angangco confirmed that the case between former Ako Bicol Representative Mr. Co and DigiPlus, formerly Leisure & Resorts World Corp. (LRWC), is still ongoing.
DigiPlus previously won an arbitration case on the valuation of the Midas Hotel and Casino, but Mr. Co’s firm, Eco Leisure and Hospitality Holding Co., has challenged the decision before the Pasig Regional Trial Court, where the appeal remains pending.
DigiPlus issued its statement after social media posts on Friday claimed that the Anti-Money Laundering Council’s freeze order on the former lawmaker’s bank accounts could benefit the online gaming company.
In a 2020 disclosure, LRWC said it entered into an investment agreement on Nov. 11, 2012 with Eco Leisure and Hotel Enterprises of the Philippines, Inc. (HEPI) to acquire 51% of HEPI, which operates the Midas Hotel and Casino. LRWC invested P750 million in cash for the transaction. Some reports have stated that LRWC signed a preliminary agreement with Eco Leisure and Hospitality Holding Co. to acquire 50% of HEPI for about P800 million.
Mr. Atienza said the freeze order on Mr. Co’s assets could affect Midas operations and investor sentiment in the short term. However, he noted that the financial exposure is relatively small.
“We assume that the freeze order imposed on Zaldy Co’s assets presents chances of a disruption, or even a complete halt in Midas’ operations [but] an operational halt only has minimal material impact on [Digiplus’] financials as their net JV (with HEPI) only accounts for 4.6% of their book value (based on FY24 FS), so their growth prospects from international expansion remain unchallenged by this news,” he said.
DigiPlus shares fell by 0.82% or 20 centavos to close at P24.30 on Monday.