A Philippines-based firm seeking to recapitalise the insolvent and in-receivership Australia-listed Asian casino operator Silver Heritage Group Ltd, is said to have obtained from Australia’s Foreign Investment Review Board, a “letter of no objection” to the Philippine firm acquiring – via a subsidiary – a 92-percent interest in the casino firm.
The news was given in a Wednesday filing to the Philippine Stock Exchange by DFNN Inc. The latter company is said to own 18.98 percent of HatchAsia Inc, the firm seeking to recapitalise Silver Heritage.
DFNN, founded in 1999, describes itself as an “information technology solutions and systems integrator”.
Silver Heritage developed the casino property Tiger Palace Resort Bhairahawa, on Nepal’s border with India. It began gaming operations in December 2017.
A HatchAsia unit registered in Australia – Hatch Australia Holdings Pty Ltd – would be the entity realising the recapitalisation of Silver Heritage, a firm listed on the Australian Securities Exchange.
A letter to the Australian bourse from professional services firm KPMG dated September 16 and filed with that exchange on Thursday, confirmed that a deed of company arrangement “was executed by all relevant parties” on September 15. It noted the recapitalisation was subject to the approval of Silver Heritage shareholders. The letter said the anticipated completion date was this month.
KPMG was writing on behalf respectively of appointed administrators and receivers tasked with dealing with Silver Heritage’s business affairs.
Share consolidation
DFNN said in its Manila filing the exercise would involve “the acquisition of shares equal to approximately 92 percent of the issued share capital of Silver Heritage through a consolidation of shares of existing shareholders and a new issue of ordinary shares” to Hatch Australia Holdings.
KPMG’s letter clarified that the share capital consolidation for Silver Heritage would be on a “1 for 452 basis”
Following the consolidation, there would be issuance of a maximum of just over 53 million shares – comprising 95 percent of the then-issued capital of the company – at an issue price of AUD0.01 (US$0.00721) per share, with 92 percent of the firm’s newly-enlarged equity going to the deed proponent, and 3 percent of the equity – via issuance – going to Silver Heritage’s secured creditors.
DFNN said the “successful conclusion” of the exercise – if taken to a point sought by the new investors – “would eventually result in the HatchAsia shareholder-controlled entity being listed on the Australian stock exchange, and DFNN owning part of the Australian Securities Exchange-listed entity”.
It was not clear from DFNN’s filing whether the Foreign Investment Review Board’s letter of no objection on Silver Heritage’s recapitalisation was sufficient to clear the deal, or whether additional regulatory approvals would be needed.
On August 31, the Manila Bulletin newspaper had quoted Calvin Lim, chief executive of DFNN, saying: “As a shareholder, we welcome and look forward to the foray of HatchAsia in the international market.”
The DFNN CEO was further quoted stating that having an interest in a firm – that would in turn have a stake an Australia-listed entity – would “provide us better access to a wider capital base as well as create new business streams for a larger audience reach that will pave the way for more Philippine businesses to globalise”.
In a September 17 filing, DFNN had said the transaction involved a AUD530,000 – about US$380,000 – cash consideration, and 3 percent of the issued shares in Silver Heritage.
HatchAsia, founded in 2000, is – according to its website – involved in: business management outsourcing services, a segment commonly associated with call-centre operations; “gaming outlet operations”; financial technology, or “fintech”; and office space leasing.
