Macau casino investor Success Universe Group Ltd has agreed to dispose of, at a loss, shares it holds in a business linked to the sale of mainland China lottery tickets.
In a Friday filing, Success Universe said that the disposal of its stake and loans in Honour Rich China Development Ltd – to Wide Fortune Group Ltd – in return for HKD12 million (US$1.5 million) was “relieving the group from further need to inject working capital to sustain the operation of its [Honour Rich's] business”.
Honour Rich had posted net losses of HKD19.1 million and HKD20.8 million respectively in the financial years 2015 and 2016, with net liabilities reaching HKD92.8 million as of year ended December 31, 2016, said the filing.
In January 2015, several mainland authorities had issued jointly a notice barring online sale of China official lottery tickets, pending “self-correction” of the market. Subsequently, Success Universe had decided to suspend “paperless lottery sales agency services voluntarily since early 2015, which resulted in significant decrease in operating revenue and increase in loss of the group’s lottery business for the year ended 31 December 2016”, the Friday filing stated.
According to Success Universe’s 2017 interim results, the group recorded a loss of HKD1.2 million in the lottery segment for the six months ended June 30, down from the HKD10.8 million in the same period in 2016.
Success Universe group-wide posted a net loss of approximately HKD21.1 million for the six months to June 30, compared to a loss of HKD12.6 million in the prior-year period.
The company is a joint venture partner – alongside a unit of Macau gaming operator SJM Holdings Ltd – in casino hotel Ponte 16, located in the Inner Harbour on the Macau Peninsula. Following Typhoon Hato on August 23, the gaming area on the ground floor of Ponte 16 was flooded to a depth of 3 feet (0.91 metres), with casino operations suspended for several days.
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”We have not had discussions about the concession renewal with the [Macau] government. We have taken the view that if we continue to deliver on what we expect is the expectations from operators, then we will be treated fairly”
Chairman and chief executive of MGM Resorts, the parent of Macau casino operator MGM China