GGRAsia – Jeju Shinhwa op to raise US$3.6mln via share issuance

Jeju Shinhwa op to raise US$3.6mln via share issuance

Mar 05, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck

Hong Kong-listed casino developer Shin Hwa World Ltd says it will issue a total of 845.25 million new shares to raise net proceeds of about HKD28.5 million (US$3.6 million). The majority of the funds will be used for “upgrade, repair and maintenance” of Jeju Shinhwa World, a complex with a foreigner-only casino in Jeju, South Korea.

The company said in a Monday filing that it will issue the new shares at a subscription price of HKD0.034 apiece, a discount of approximately 19.0 percent to the closing price of HKD0.042 per share on Friday, March 1.

Trading in the shares of Shin Hwa World on the Hong Kong bourse resumed on Tuesday, after being suspended the day before at the firm’s request, and ahead of the share-issuance announcement.

The subscriber was identified in the filing as Resplendence Investment Development Ltd, a company incorporated in the British Virgin Islands.

The subscriber is described as an investment holding company owned by Zhang Tingting, who is also the guarantor of the deal. The person is said to be an individual investor and a real estate property owner of the group’s residential development, which is also part of Jeju Shinhwa World.

In Monday’s filing, Shin Hwa said it intends to use approximately HKD14.0 million of the net proceeds for “upgrade, repair and maintenance of the existing building, equipment and facilities” within Jeju Shinhwa World.

Another HKD10.0 million will be used for “payment of interest expenses,” and approximately HKD4.5 million for “sales and marketing promotion and advertising expenses”.

“The issue of new shares … is a more desirable financing option as compared with debt financing as it does not create any interest payment obligations which will have a negative impact on the gearing ratio of the group,” stated the casino firm.

Following the exercise, Resplendence Investment will hold a 16.67-percent stake in Shin Hwa World.

Yang Zhihui, chairman of Shin Hwa World, will have his stake reduced to 29.12 percent, from 35.06-percent. The total of shares held by public shareholders will decline to 31.78 percent, from a previous 38.14 percent, according to the filing.

On Friday Shin Hwa World Ltd said its consolidated net loss for full-year 2023 would in likelihood more than double from the prior year. Such loss is expected to be in the range of HKD450 million to HKD540 million, it stated.