The head of Macau junket investor Suncity Group, Alvin Chau Cheok Wa, is arranging to sell – to subsidiaries of a Hong Kong-listed firm he controls – a company called Suncity Group Tourism Ltd. It is part of the suitor group’s strategy for investing in the Vietnam and South Korea tourism markets, according to a filing on Thursday by the suitor group, Sun Century Group Ltd.
After acquiring the target firm, the suitor group might seek to raise funds to pay off loans previously raised by the suitor – some of which are due in 2016 – and also use some of the newly-raised money toward business development in overseas markets.
Thursday’s filing didn’t specify how much Sun Century Group might seek to raise, or by what method, but said it would “make further announcement(s) in accordance with the requirements of the listing rules as and when appropriate”.
The target company is said to be negotiating – with independent third parties – some service agreements for the supply of ferry tickets, provision of helicopter services and access the online booking system of a helicopter service, as well as provision of airport VIP check-in services.
The suitor, Sun Century Group, was – until March 2012 – known as Hong Long Holdings Ltd, a firm engaged in the development of real estate in mainland China. Sun Century Group is described in Thursday’s filing as engaged in the “development of residential and commercial properties, as well as leasing of commercial properties in Guangdong, Liaoning and Anhui provinces, and hotel consultancy service”.
Thursday’s announcement said the suitor group had total bank and other borrowings of approximately RMB2.04 billion (US$305 million) as at December 31, 2015, of which loans in an aggregate amount of approximately RMB1.56 billion would be due in 2016.
According to its 2015 annual report, filed in May this year, Sun Century Group made a loss of RMB245 million in the financial year ending December 31. Turnover that year was derived from sales of properties and property leasing, said the report.
The target firm Suncity Group Tourism was incorporated in Macau in January 2014, but didn’t generate any revenue that year or for most of 2015 – only beginning operations in December 2015 after obtaining a travel agency licence from the Macao Government Tourism Office, said the filing.
Thursday’s announcement said the reason for the transaction was that “due to the slowdown of economic growth in the PRC [People’s Republic of China], the group intends to explore and invest in… projects and business opportunities with good potential”.
Sun Century Group further stated: “In addition to the diversification to the tourism related service business in Macau through the acquisition, the group intends to further expand its planned tourism-related business to other countries in the Asian market such as Vietnam and South Korea.”
It added: “By integrating with its current hotel consultancy service business, the [Sun Century] group plans to provide consultancy, advisory and technical services for large scale resorts and/or gaming and entertainment facilities in places with rapid growth in the tourism industry. The services will include work relating to the building, equipping and fitting-out of resorts and/or gaming and entertainment facilities and the preparation and organisation of their marketing activities.”
Under the proposed deal, the joint vendors of Suncity Group Tourism – Mr Chau and his sister Chau Sui Heng – will relinquish sale shares in Suncity Group Tourism for a consideration of MOP1.5 million (US$187,800). The purchaser has also agreed to take over – on a dollar for dollar basis – a MOP6.48-million interest-free loan owed by Suncity Group Tourism to an associate of Mr Chau. The loan will be taken on by the suitor group on the basis that at the time the deal is completed, it will not amount to more than MOP8 million, said the filing.
Mr Chau was described in the filing as the chairman as well as an executive director of Sun Century Group, and its controlling shareholder, with approximately 57.31 percent of the issued share capital as of Thursday.
Macau junket investor Suncity Group, a privately-held business, is involved in the development of a casino resort in Vietnam’s Quang Nam province. The casino resort is being developed by Hoi An South Development Co Ltd, a joint venture between Suncity Group, Vietnam-based asset management firm VinaCapital Group and Gold Yield Enterprises Ltd, a subsidiary of Hong Kong-based Chow Tai Fook Enterprises Ltd.
Construction of the first phase of the scheme, which will include three hotels, is expected to be completed in the first quarter of 2019, Suncity Group said in May in a press release sent to GGRAsia.
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"The [Macau] government has a lead in this subject in regards to what should be done after the [gaming] concessions expire. We will be first listening to what the government will say”
Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings