South Shore struggles as bank seeks US$381mln repayment
South Shore Holdings Ltd, the promoter The 13 Hotel (pictured) in Macau, says it has applied for a “standstill” with one of its lenders. The move is in order to restrain that bank from enforcement action after it demanded repayment of a loan amounting to just over HKD2.95 billion (US$380.7 million).
In a Monday filing, the Hong Kong-listed firm said it was “seeking assurance from the bank that it will not take imminent steps either to enforce its security over The 13 Hotel or to liquidate the company”. South Shore said it was now seeking a standstill agreement due to the “severe adverse effect of the Covid-19 pandemic on the state of the market, in Macau and generally.”
The company has not identified the lender in its most recent filings.
The 13 Hotel is a a venue located on the border between Coloane and the casino district of Cotai in Macau. The hotel had a partial opening on August 31, 2018. The firm aspired to have a casino at the property but the promoter had already decided to ‘reposition’ the complex’s “business and operational model without gaming”.
South Shore warned a fortnight ago that the bank had demanded “immediate payment” of overdue interest amounting to approximately HKD71 million in respect to its term-loan facility. The bank stated that failure to repay by March 31, 2020 would lead the lender to take “enforcement steps” to recover an additional amount of nearly HKD470 million.
“On 1 April 2020, the bank issued a further demand for the HKD470 million … and on account of the failure to repay, accelerated its demand for all additional principal and interest under the facility agreement, in the amount of approximately HKD2,481 million (in aggregate amounting to approximately HKD2,951 million as at 31 March 2020),” said South Shore in its Monday filing.
South Shore added: “Neither the borrowing entity (a wholly-owned subsidiary of the company), nor the company (as guarantor) can repay at this time.”
South Shore had flagged previously its intention to “repay the bank out of the proceeds of disposal of a 50-percent interest in the subsidiary of the company that beneficially owns The 13 Hotel”.
The company had flagged in November some rejig of the investor line-up, saying that one of its units had arranged for disposal of a 50 percent stake in the hotel complex.
“The ongoing hotel sell-down transaction remains of interest to the bank, and the company will continue with its endeavours to execute that transaction,” stated South Shore in its latest filing.
The company said also it had agreed with the potential buyer of the 50-percent stake in The 13 Hotel to extend the date to complete the deal to June 14, “as additional time is required for the fulfilment of certain conditions”.
It added: “If it completes, the company will work with the bank to realise the balance of its interest in the project. And, should the hotel sell-down transaction not complete, for any reason, the company will work with the bank to find other prospective buyers for the hotel and/or site.”
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