Hong Kong-listed South Shore Holdings Ltd, the promoter The 13 Hotel (pictured) in Macau, says a bank has demanded “immediate payment” of overdue interest amounting to approximately HKD71 million (US$9.2 million) in respect of a term-loan facility. The company did not identify the lender in its Tuesday filing to the Hong Kong Stock Exchange.
According to the filing, the bank warned the company of “enforcement steps to be taken without notice in the event of a failure to repay, inter alia, principal and further interest in the aggregate amount of approximately HKD470 million on 31 March 2020”.
South Shore stated: “Based on the current status, it is unlikely that the group will be able to meet this deadline.”
The 13 Hotel is a a venue located on the border between Coloane and the casino district of Cotai in Macau. The hotel had a partial opening on August 31, 2018. The firm aspired to have a casino at the property. The hotel is currently closed “in light of the recent outbreak of coronavirus and the challenging economic conditions,” confirmed the promoter in Tuesday’s statement.
South Shore reported in August a net loss of HKD5.85 billion for its fiscal year ended March 31, 2019, mainly because of an aggregate impairment of approximately HKD4.70 billion on the carrying amount of assets under the hotel segment. Such impairment was due to an update to its business model, as the company said at the time there was no longer a plan to launch gaming operations at the property.
In November, the company reported a net loss of HKD506.7 million in the six months to September 30, compared to nearly HKD442.4 million in the prior-year period.
Trading in South Shore shares resumed on Wednesday (March 25), after being suspended since Monday.
In Tuesday’s filing, South Shore said its intention was to “repay the bank out of the proceeds of disposal of a 50-percent interest in the subsidiary of the company that beneficially owns The 13 Hotel”.
South Shore had flagged in November some rejig of the investor line-up, saying that one of its units had arranged for disposal of a 50 percent stake in the hotel complex.
“The company is continuing in its efforts to finalise the circular relating to the proposed sale, but is aware that this is likely to necessitate an extension to the long stop date (currently being 14 April 2020) under the related sale and purchase agreements,” said South Shore in its latest filing.
It added: “In the meantime, the group is in constant discussions with the bank on remedial measures and on potential alternative repayment plans.”
In the interim report filed in November, South Shore had acknowledged that it was already in breach of a number of conditions or covenants required by certain lenders. The company said at the time that it owed just over HKD2.94 billion to a single bank.
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Amount that each Macau casino operator paid for the circa six-month extension of their respective contract