A prominent real-estate developer and casino operator, NagaCorp Ltd, announced the delay in completing the latest Cambodian gaming project. The construction of the Naga 3 facility scheduled to complement the NagaWorld gaming complex in Phnom Penh as of 2025, has been postponed by four years as the company seems to be still facing a default in outstanding funding falling due in July 2024, according to Inside Asian Gaming.

Considering Options:

NagaCorp is reportedly ”carefully and seriously considering options” to complete the Naga 3 project. As the developer thrives to balance the projected revenue and expenditure sides, such options reportedly include the possibility to adjust the project size to the current financial capabilities. As GGRAsia reports, the company indicated “the external geopolitical macroeconomic environment and the stiff global inflationary pressures”  as key drivers to opt for such a decision.

Completion Extended:

According to the same source, the respective subsidiary of NAGACorp signed another agreement on June 3, 2023 with the project contractor “to update the completion date of the design and build agreement to a date on or before 30 September 2029, subject to other further adjustments.” This date reportedly represents a four year extension of the original design and construction agreement deadline.

$3.5 Billion Development:

The Naga 3 development was reportedly agreed in 2019, and the value of the project was estimated at $3.5 billion with half of the funding expected to be secured by the founder and chief executive, Chen Lip Keong, according to GGRAsia. The development was supposed to include around 5,000-room hotel, 1,300 gaming tables, and 4,500 electronic gaming machines, as NagaCorp reportedly announced in March 2023.

It was then that the company reportedly said that rough construction works were almost completed, with works on main building expected to start in mid-2023. But, the source reports that the company’s spending gradually slowing since 2021 doesn’t seem to respectively set off the outstanding debt.

Outstanding Debt:

The announced delay in commissioning the Naga 3 facility follows the November 2022 warning of the rating agency Moody’s Investors Service that the developer was facing a default on $421.7 million in outstanding liabilities due in July 2024, according to Inside Asian Gaming. The source also reports that NAGACorp offered to repurchase around $120 million of these liabilities in 2022, but the outstanding amount seems anyway still too high to be covered by the given deadline.

In November 2022, Moody’s analysis reportedly read: “NagaCorp’s operating performance is recovering following pandemic-related disruptions last year, however, we expect EBITDA in 2022 and 2023 to remain well below that of 2019. Consequently, we expect the company is likely to require external financing to repay its outstanding notes.”

Limited Liquidity Sources:

It added: ”However, [the company’s] ability to raise external financing is difficult because of the tight funding conditions prevailing in the current economic environment. At the same time, NagaCorp has limited sources of liquidity because of its lack of bank facilities and divestible noncore assets.” 

According to GGRAsia, NagaCorp in April reported EBITDA of $59 million for the first quarter of 2023, which was around 3% less than the same period last year. The company reportedly indicated ”staff costs and luck factor” as the main reason for the decline.

Naga 3 Awaits 2029 Launch:

Hong Kong-listed NagaCorp has been a licensed casino operator in Phnom Penh since 2006 when the company opened the NagaWorld property. The property expansion followed in 2017 with the addition of Naga 2 property and the two facilities have jointly been referred to as the NagaWorld Complex since. The complex supposed to be expanded in 2025 will now wait for additional four years to be complemented with the Naga 3 casino resort.