The gearing ratio of Hong Kong-listed casino developer Shin Hwa World Ltd is “expected to improve” upon the use of proceeds from a new rights issue, says a report from Jun Hui International Finance Ltd, retained by Shin Hwa World Ltd as independent financial advisor.
The developer is the promoter of Jeju Shinhwa World (pictured in a file photo), a resort complex with a foreigner-only casino in Jeju, South Korea.
In late July, the company announced a proposal for a rights issue, with the intention of raising approximately HKD182.6 million (US$23.34 million).
The firm’s 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 at the time.
Shin Hwa World Ltd is proposing to implement the rights issue on the basis of one rights share for every one share held by shareholders of the firm. The exercise is due to be completed by October, but it still requires shareholder approval at a meeting scheduled for September 16.
In its report, Jun Hui International stated: “We are the view that the terms of the rights issue are on normal commercial terms, fair and reasonable, and in the interests of the company and the shareholders as a whole.”
It added: “We therefore advise the independent board committee to recommend the independent shareholders to vote in favour of the ordinary resolution to be proposed at the special general meeting to approve the rights issue.”
As per the financial advisor, Shin Hwa World Ltd’s gearing ratio “was approximately 19.6 percent” as of December 31, 2024.
“The gearing ratio of the group is expected to improve upon the application of such proceeds,” said the institution.
It added: “The overall financial impact to the group upon completion of the rights issue is in the interests of the company and the shareholders.”
Shin Hwa World Ltd said the rights issue was an “opportunity to raise additional funding” in a bid to “strengthen the group’s financial position by relieving the financial burden”, as well as providing capital for the group to meet its financial obligations and maintain operational stability.
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 ageing 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 said a fortnight ago it expects its first-half consolidated net loss to increase by “not more than 12 percent” from a year earlier. The firm posted a net loss of just over HKD231.5 million in the first half of 2024.
