GGRAsia – Jeju casino controller’s share offer undersubscribed

Jeju casino controller’s share offer undersubscribed

Jan 13, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck

New Silkroad Culturaltainment Ltd, a firm that has a controlling interest in a foreigner-only casino on Jeju Island in South Korea, said on Thursday its own controlling stockholder – to which it is indirectly indebted – had taken up open-offer shares passed over by other investors.

Hong Kong-listed New Silkroad had been seeking to raise HKD1.47 billion (US$190 million) gross via the open offer announced in October and confirmed on December 13. It had been due to 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.

But New Silkroad said in a January 9 filing that at the closure of the offer on December 30, valid acceptances for only 36.74 percent of the shares – i.e., 336,664,526 shares – had been received, with most of the shares being subscribed by Macrolink International Land Ltd.

The filing said the balance of New Silkroad shares not picked up under the open offer – i.e., 579,774,428 shares – had also been taken up by Macrolink International. Both companies are subsidiaries of Macrolink Culturaltainment Development Co Ltd, described in previous filings as a firm listed on the Shenzhen Stock Exchange.

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 about 87.3 percent of total outstanding debt – was due to Macrolink and parties related to Macrolink.

In a Thursday filing, New Silkroad said that all of the shares directly held by Macrolink International – representing approximately 54.79 percent of the issued share capital of New Silkroad – had been pledged in favour of the lenders in relation to the provision of syndicated term loan facilities of up to HKD1.2 billion.

New Silkroad additionally issued a press release on Thursday saying that the Jeju casino in which it has a controlling interest has been renamed officially as “MegaLuck”.

The casino – which under South Korean law is allowed to serve only foreign tourists – is at the Jeju KAL Hotel.

The press release said the gaming facility currently operates one roulette table, two blackjack tables, 25 baccarat tables and 24 electronic gaming machines, adding there were plans to develop further the resort.

“The renaming signifies the success of the new management in consolidating the existing casino business… grasping the opportunities brought about by the rapid development of gaming and tourism in Jeju,” said the firm.

According to previous filings, 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, and production and sale of Chinese baijiu wine – under its own brands – in the People’s Republic of China.

After what it termed “a sequence of acquisitions,” New Silkroad noted in Thursday’s press release that it now controls 72 percent of an entity called MegaLuck Co Ltd, which it said owns a gaming licence on Jeju.

“MegaLuck has already started to make contribution to New Silkroad financially. It has recorded HKD17-million revenue for the first half of 2016, accounting for 14.8 percent of the company’s total revenue,” added New Silkroad.

The company reiterated it had formed what it termed a “strategic alliance” with gaming entrepreneur Lawrence Ho Yau Lung’s firm Melco International Development Ltd in May last year.

“Melco [International] will provide planning, development and implementation advisory services for the new casino, as well as the preparation and marketing events for the casino’s commercial launch,” affirmed New Silkroad in Thursday’s press release.