Hong Kong-listed casino developer Shin Hwa World Ltd, promoter of Jeju Shinhwa World (pictured in a file photo), a resort complex with a foreigner-only casino in Jeju, South Korea, has announced a proposal for a rights issue, with the intention of raising approximately HKD182.6 million (US$23.34 million).
The company stated in a Friday filing that it was proposing to implement the rights issue on the basis of one rights share for every one share held by shareholders of the firm. The operation is set to be completed by October, but it still requires shareholder approval, it further noted.
Last year, Shin Hwa World Ltd conducted a separate rights issue, on the basis of two rights shares for every one adjusted share, at a subscription price of HKD0.26 per rights share.
The firm’s latest plan is to issue up to almost 1.83 billion rights shares – assuming there is no change in the total number of issued shares – at a subscription price of HKD0.10 per rights share.
The estimated net proceeds from the operation are expected to reach up to HKD178.8 million, the company said.
Shin Hwa World Ltd stated that the subscription price represents “a discount of approximately 33.99 percent to the average closing price of approximately HKD0.1515 per share” over the previous 10 consecutive trading days.
The firm noted that “in recent years, the group has faced increasing challenges in sustaining its operations due to unfavourable macroeconomic conditions combined with rising operating and financing costs, as well as shifts in customer spending behaviour.”
It added: “In response to these ongoing difficulties, the company has been making continuous efforts to secure new sources of capital and financing opportunities to meet its financial obligations and support its operational needs.”
Shin Hwa World Ltd said it considered the rights issue “an opportunity to raise additional funding to strengthen the group’s financial position by relieving the financial burden and provide working capital to the group to meet the financial obligations, to maintain the operational stability and to enable sustainable development of the group in a longer term without additional interest burden.”
The firm plans to use approximately HKD100.0 million from the rights issuance proceedings for repayment of a loan of HKD50.0 million due and payable in November, and a bond of HKD50.0 million due and payable in April next year.
Another HKD45.0 million is intended for payment of interest expenses, and approximately HKD20.0 million is for maintenance of the “existing aging infrastructure in Jeju Shinhwa World” and for the development of new facilities.
Approximately HKD9.0 million is intended for sales and marketing expenses, and the remaining of approximately HKD4.8 million is intended for general working capital.
Shin Hwa World Ltd narrowed its net loss for 2024 by 5.4 percent. The loss was just over HKD494.1 million for full-year 2024, compared with a loss of HKD522.4 million a year earlier, according to a filing in March.
At that time, Shin Hwa World Ltd announced a bond subscription agreement for an aggregate principal amount of HKD50.0 million.
