New Silkroad Culturaltainment Ltd, a Hong Kong-listed firm that says it has an interest in a casino project on Jeju Island in South Korea, has announced that its controlling shareholder – to which it is significantly indebted – has drawn down the first HKD300 million (US$38.6 million) of a syndicated loan. New Silkroad mentioned the news in a Friday filing.
A condition of the syndicated loan is that New Silkroad’s controlling shareholder – Macrolink Culturaltainment Development Co Ltd, a firm listed on the Shenzhen Stock Exchange in mainland China – pledges and deposits 841,197,369 shares of New Silkroad, representing 36.72 percent of the issued share capital of New Silkroad.
New Silkroad is planning to raise a minimum of approximately HKD1.47 billion gross via a share subscription.
According to a December 14 filing, New Silkroad will issue not less than 916,454,764 offer shares at the subscription price of HKD1.60 per offer share, on the basis of two offer shares for every five shares held in the company on the record date.
New Silkroad is an investment holding company principally engaged – via subsidiaries – in the development and operation of real estate, cultural tourism and gaming businesses in Jeju, South Korea, and production and sale of Chinese baijiu and wine – under its own brands – in the People’s Republic of China.
According to the unaudited management account of New Silkroad for the eight months ended August 31, its total borrowings amounted to approximately HKD660.6 million as of that date, of which approximately HKD576.5 million – representing approximately 87.3 percent of total outstanding debt – was due to Macrolink and parties related to Macrolink.
Commentary in a New Silkroad filing to the Hong Kong Stock Exchange in October – and reiterated in its open offer document dated December 14 – said the open offer would allow New Silkroad to “reduce its finance costs, lower its debt level and strengthen its financial position,” providing funding for a 72-percent owned unit called MegaLuck Co Ltd “to develop its casino business in Jeju, Korea”.
A unit of Melco International Development Ltd, a firm led by Lawrence Ho Yau Lung, is to provide consultancy services to the casino being developed by New Silkroad, according to a May filing by Melco International.
