A bank loan with a principal value of HKD3.04 billion (US$387.4 million) is currently payable to the lenders on demand, by the promoters of The 13 Hotel project (pictured) in Macau.
That is according to a Thursday filing by the hotel scheme’s developer, South Shore Holdings Ltd, known until last week as The 13 Holdings Ltd.
The firm said it originally had a covenant on the loan that required the hotel to open by July 31, 2017. It noted this requirement had been renegotiated with the lender on several occasions since then. The scheme’s backers aspire to have a casino at the property.
The firm had now asked for a further pushing back of the deadline – this time until July 31 this year, but stated in the Thursday filing “the group has not received any written confirmation from the bank that the extension request has been successful.”
The firm added: “As a result, as at the date of this announcement, such bank borrowings are repayable on demand.”
But it noted it was confident it could “obtain all the licences for the operation of hotel business from the relevant authorities by the end of July 2018″.
The firm did not name the lender that had requested the covenants on the opening date. In its 2017 annual report, issued in July 2017, The 13 Holdings had said that as of March 31, 2017, a total of approximately HKD3.02 billion had been drawn from a six-year term loan facility of nearly HKD3.05 billion provided by a “mainland China-based bank”.
In July last year, Bloomberg reported that The 13 Holdings had missed a hotel opening deadline condition on a HKD3-billion loan from Bank of Communications Co Ltd.
South Shore Holdings said in its latest filing on the matter – contained in its annual results for the year ending March 31, filed on Thursday: “Up to the date of this announcement, the group has not been rejected on the application for extension.”
The hotel’s promoter added: “The bank has frequent communications with the group on the progress of hotel opening preparation and also shows the positive support on the group. Therefore, the directors of the company do not expect the application of further extension will be withheld by the relevant bank.”
Hotel reinspection needed
On June 20 GGRAsia reported that management for The 13 Hotel, a project on the Cotai-Coloane border of Macau, had been told by the Macao Government Tourism Office (MGTO) that it had to “apply for reinspection” regarding its local hotel licensing process, due to “unfinished works”.
The hotel’s developer said in its Thursday filing: “Due to additional time required for completing defective works after the inspection by MGTO, the company has further revised the expected opening date of the hotel to July 31, 2018 (which may be further revised according to the actual circumstances in respect of the development).”
The filing added that as of March 31 this year, the hotel development segment of the group’s business recorded assets of approximately HKD8.99 billion, net of an impairment loss of approximately HKD1.20 billion “to reflect the valuation provided by an independent valuer” as of May 31.
The “hotel under development” assets included cost of land, the hotel itself, and deposits paid for acquisition of fixtures, furniture and equipment.
The segment recorded liabilities of nearly HKD4.26 billion, including the “liability portion of convertible bonds issued for financing the hotel development and borrowings for the hotel development”.
There was a segment loss of approximately HKD1.53 billion for the year ended March 31, representing “the impairment loss and pre-opening expenses recorded in the current year”.
The annual results’ filing noted the group had been “actively negotiating” with a number of commercial banks and other financial institutions as well as “certain potential new investors” to secure some new sources of funding in the form of debt and/or equity to an aggregate of HKD1.89 billion.
The group has proposed to dispose of its 51.76-percent interest in Paul Y. Engineering Group Ltd for a consideration of HKD300 million; a move for which it obtained shareholder approval on May 8.
South Shore Holdings said its 12-month results had been prepared on a “going concern basis,” in the belief it would have sufficient working capital to finance its operations and to meet its financial obligations for “at least the next 12 months” from the date of approval of the consolidated financial statements.
In a February 25 filing, the firm said the casino at The 13 Hotel might only open by March 31, 2019, along with some shops at the complex.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China