Renowned real estate developer and casino operator Nagakov, Inc. announced a delay in completion of its latest Cambodian gaming project. According to Inside Asian Gaming, the construction of the Nagar3 facility, which will complement the Nagarwold gaming complex in Phnom Penh as of 2025, has been delayed by four years as the company appears to still be facing default due to a decrease in outstanding funds due in July 2024.

Consider options:

Naga Corp is reportedly “carefully and seriously considering options” to complete the Naga 3 project. As developers thrive to balance expected revenue and spending aspects, those options include the possibility to scale the project to match current financial capacity. As GGRAsia reported, the company pointed to “external geopolitical macroeconomic environment and rigid global inflationary pressures” as key drivers for choosing such decisions.

Extended Completion:

According to the same source, each of NAGACorp’s subsidiaries signed another contract with the project contractor on June 3, 2023 “to update the completion date of the design and construction contract to or before September 30, 2029, subject to other further adjustments.” The date is said to have extended the original design and construction contract deadline by four years.

Development of $3.5 billion:

The Naga 3 development was reportedly agreed in 2019, with the project estimated to be worth $3.5 billion, and founder and CEO Chen Lip Keong is expected to secure half the funding, according to GGRAsia. The development had to include a hotel with about 5,000 rooms, 1,300 game tables, and 4,500 electronic game machines, as NagaCorp reportedly announced in March 2023.

That’s when the company reportedly said rough construction work was nearly complete, with construction of the main building expected to begin in mid-2023. However, the company’s spending has been gradually slowing since 2021, the source reported, though each does not appear to offset the outstanding debt.

Outstanding liabilities:

According to Inside Asian Gaming, the announced delay in commissioning of the Naga 3 facility came after credit rating agency Moody’s Investors Service warned in November 2022 that it was facing default on $421.7 million of outstanding debt due in July 2024. Also, sources reported that Naga Corporation had offered to repurchase about $120 million of these debts in 2022, but the outstanding amount still appeared to be too high to cover by a given deadline.

In November 2022, Moody’s analysis revealed, “Nagakov’s operating performance is recovering after last year’s pandemic-related setbacks, but we expect EBITDA for 2022 and 2023 to be much lower than in 2019. As a result, the company expects external financing to be required to repay outstanding bonds.”

Limited liquidity sources:

“However, the prevailing financing conditions in the current economic environment make external financing difficult. At the same time, Nagakov has limited sources of liquidity due to a lack of banking facilities and sellable non-core assets,” Nagakov added

According to GGRAsia, Naga Corp reported first-quarter 2023 EBITDA of $59 million in April, down about 3% year over year. The company reportedly cited “employee costs and luck factors” as the main reasons for the decline.

Naga 3, 2029 to be released:

Hong Kong-listed Naga Corp has been a licensed casino operator in Phnom Penh since opening the NagaWorld property in 2006. Following the expansion of the property in 2017, the Naga 2 property was added, and the two facilities have since been jointly called the NagaWorld Complex. The complex, which is set to expand in 2025, will now take another four years to be complemented with the Naga 3 casino resort.


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