On Thursday, RGB International Bhd, a prominent Malaysian slot machine supplier, issued a filing revealing a significant update in their business dealings. The company has ratified a Deed of Amendment and Restatement through its wholly-owned subsidiary, RGB Ltd. This document concerns a leasing agreement involving 432 electronic gaming machines situated in 18 casinos across the Philippines. This amendment marks a pivotal development in the company’s ongoing project with Pinnacles Inc, a Philippines-based partner.
Overview of the Original Agreement
In 2019, RGB Ltd entered into a Project Leasing Agreement with Pinnacles Inc. The agreement established a shared investment structure between the two companies, with each party responsible for 50% of the investment costs, joint expenses, and rental revenues derived from operating the 432 gaming machines. The total investment for this venture was approximately USD 15.5 million.
Under this agreement, both RGB Ltd and Pinnacles Inc were equal partners, each bearing half of the costs and sharing equally in the revenue generated from the gaming machines.
Adjustment of Revenue and Cost Sharing
Under the revised deed, RGB Ltd will maintain its 50% share in costs and revenues. However, Pinnacles Inc will reduce its stake from 50% to 30%. Timor Holding S.A., which includes RGB directors Chuah Kim Seah and Steven Lim Tow Boon among its board members, will take over the remaining 20% share of both expenses and rental revenue.
Strategic Partnerships
The amendment is designed to enhance strategic partnerships. By redistributing the revenue and cost-sharing arrangement, the deal aims to leverage the strengths of all involved parties. RGB Ltd’s established operational and retail network in the Philippines, combined with the reputable brands of Pinnacles Inc and Timor Holding S.A., is expected to yield positive synergies.
Impact on RGB Ltd
The amendment does not alter the financial standing of RGB Ltd. The company has stated that there will be no gain or loss recorded on its books as a result of this change. The primary purpose of entering into this new deed is to officially document Pinnacles Inc’s reduction in participation and to formalize the involvement of Timor Holding S.A.
Previous Developments
In April, RGB International Bhd made headlines with another strategic move. The company announced a deal with Timor Holding S.A. to acquire 86 gaming machines installed in Philippine casinos. Additionally, this deal included a 20% stake in the revenue generated by these machines. This acquisition was a part of RGB’s broader strategy to expand its footprint in the Philippine gaming market.
Strategic Implications
The restructured agreement highlights RGB International Bhd’s adaptive approach to partnerships and investment. By incorporating Timor Holding S.A. into the project, RGB not only diversifies its business relationships but also taps into additional resources and expertise. This adjustment aligns with broader strategic goals, including enhancing market presence and optimizing revenue streams.
Operational Synergies
The involvement of Timor Holding S.A. is expected to bring new operational synergies. Timor’s expertise, coupled with RGB’s robust network in the Philippines, could potentially lead to more efficient operations and improved financial performance. This collaboration could also strengthen the overall market position of RGB and its partners in the competitive gaming sector.
Financial Impact
The financial implications of the new deal appear to be neutral for RGB Ltd, as there is no immediate gain or loss. However, the real benefits will likely emerge over time through increased revenues and shared operational efficiencies. The redistribution of revenue shares may also impact the financial stability of Pinnacles Inc, which has seen its stake reduced from 50% to 30%.
Future Prospects
The amendment paves the way for future collaborations and growth opportunities. By formalizing these partnerships and adjusting the financial terms, RGB International Bhd and its partners can focus on leveraging their combined strengths to capture more market share and drive profitability. This strategic repositioning could set the stage for further expansion and investment in the region.
The recent amendment to the Project Leasing Agreement between RGB Ltd and Pinnacles Inc, alongside the involvement of Timor Holding S.A., marks a significant milestone in RGB International Bhd’s business strategy. The changes reflect a strategic realignment aimed at optimizing revenue-sharing and operational efficiencies. As the gaming industry continues to evolve, these strategic adjustments position RGB and its partners for enhanced growth and success in the competitive Philippine market.