GGRAsia – Summit Ascent subscribes US$248mln new Suntrust bonds

Summit Ascent subscribes US$248mln new Suntrust bonds

Jul 27, 2023 Newsdesk Latest News, Philippines, Top of the deck

Summit Ascent Investments Ltd, a directly-held unit of Hong Kong-listed Summit Ascent Holdings Ltd, has agreed to subscribe to convertible bonds in the principal amount of up to PHP13.51 billion (US$247.5 million) to be issued by Suntrust Resort Holdings Inc, the developer of a casino hotel scheme (pictured in an artist’s rendering) at Westside City in the Philippine capital Manila.

A Thursday filing by Summit Ascent Holdings said a reason for the “financial assistance” was that Philippines-listed Suntrust’s “failure to effect payment of interests” due under a 2020 convertible bond and a 2022 convertible bond “may deter” relevant lenders or investors “from providing funding for the remaining capital expenditure needs for the development of the main hotel casino and may significantly postpone its completion and opening”.

The filing added that current construction and development costs before Suntrust’s main hotel casino can start operation are estimated at US$1.1 billion, of which US$491 million “has already been raised” as of Thursday’s filing date.

The property is to feature 460 five-star rooms, and a casino establishment that “would cater to both mass and VIP markets,” according to information previously disclosed by Suntrust. The firm said in June it aimed to start operating the venue next year.

In June, Summit Ascent Holdings had said that investors linked to Suntrust would have to inject an additional PHP19.37 billion as cash equity into the project, as part of conditions for a fresh loan facility.

Summit Ascent Holdings stated in its Thursday filing that the new convertible bond exercise for Suntrust, and relevant conversion price, “represents a significant discount of approximately 38.9 percent and approximately 33.3 percent” to the 2020 convertible bond conversion price and the 2022 convertible bond conversion price, respectively.

The statement added that the new convertible bond conversion price of PHP1.10 per conversion share represented a premium of approximately 29.41 percent over the closing price of PHP0.85 per Suntrust share as quoted on the Philippine Stock Exchange on the last trading day prior to the announcement.

The maturity date on the new convertible bonds would be the eighth anniversary of their issuance, with the possibility of extending the maturity to the 10th anniversary.

Up to the date of the latest announcement, the sums of the principal amount and all accrued interest of the 2020 convertible bonds and the 2022 convertible bonds are about PHP6.19 billion and circa PHP6.85 billion, respectively.

The new funding exercise is subject to regulatory approval in the Philippines, and a special general meeting of Summit Ascent Holdings shareholders. A circular on the matter is likely to be sent to them on August 25.

Suntrust is indirectly controlled by LET Group Holdings Ltd, chaired by businessman Andrew Lo Kai Bong.

LET Group is also the controlling shareholder of Summit Ascent Holdings, the latter firm an investor in the Tigre de Cristal casino resort, near the Russian Pacific port of Vladivostok.

As per Thursday’s filing, currently Suntrust is 51.0 percent owned by LET Group, and 34.7 percent owned by Megaworld Corp “and related parties”.

Megaworld is a non-wholly owned subsidiary of Philippine conglomerate Alliance Global Group Inc, also a key investor in the Newport World Resorts casino complex near Manila’s international airport.

Were the new convertible bonds alone to be converted into shares in Suntrust, then LET Group would hold 81.8 percent of Suntrust, and Megaworld and parties would be reduced to 12.9 percent.