The chairman of Hong Kong-listed Suncity Group Holdings Ltd, junket casino investor Alvin Chau Cheok Wa, is exchanging a series of shareholder loans to the company – amounting in aggregate to HKD3.88 billion (US$500.6 million) – for a set of what were termed “perpetual securities”.
The announcement was made on Tuesday by the firm, in a filing to the Hong Kong bourse and in a separate press release. Mr Chau (pictured in a file photo) is also the head of Macau VIP brand Suncity.
Suncity Group said the perpetual securities would be issued “on an unsecured and unsubordinated basis”. The company added: “Under this arrangement, Suncity may choose to repay or not to repay Mr Chau both the principal and interest payments from the 10th year onwards.”
In a separate filing, Suncity Group Holdings stated in a profit warning that it expected to record a loss of approximately RMB108 million (US$15.6 million) for the first half of 2020, compared to a loss of RMB1.25 billion in the prior-year period. The company said the improvement was “mainly attributable to the gain in respect of the change in fair value of derivative financial instruments”. The firm is expected to announce its results on August 28.
Suncity Group Holdings said the loan-to-perpetual securities exchange by its chairman was “a strong injection of confidence into the group as this shows that Mr Chau is not worried about the group’s ability to repay him.”
The release quoted the businessman as saying Suncity Group was on a “fast-track of integrated resort development”.
The statement added: “I completely understand that a high growth company like Suncity requires a lot of funds to expand.”
The company noted that, by exchanging Mr Chau’s shareholder loans for equity, that would allow it to “reduce its gearing ratio, enlarge its capital base and enhance its net asset position.”
Suncity Group Holdings stated in its release that, as part of the overall deal, Mr Chau had further committed to lend to the firm a maximum of HKD6 billion “from his own pocket” in the form of additional perpetual securities, signifying his strong commitment to Suncity [Group Holdings]”. The funds are to be used to finance the firm’s integrated resort projects in Asia, said the release.
The firm is an investor in the Hoiana casino resort scheme in Vietnam. A preview of Hoiana operations, including its casino, started on June 28. The company expects to host a ‘grand opening’ of the property place in 2021.
Suncity Group Holdings is the largest shareholder of Hong Kong-listed Summit Ascent Holdings Ltd. Suncity Group Holdings is in the process of increasing its stake in the latter company.
Summit Ascent is the lead promoter of the Tigre de Cristal casino resort in the Russian Far East, with a 60-percent stake in the property’s operator Oriental Regent Ltd.
In addition, Suncity Group Holdings is also engaged in the development of a casino resort – dubbed the Westside City Project – located in Entertainment City in the Philippine capital Manila.
